Saving Money on Insurance With A Phone Call
I received my homeowners’ insurance policy renewal a few weeks ago. This is one thing that I’ve always looked at but never given any real consideration. Perhaps its ignorance or maybe I think it’s a necessary evil, but I put it off to the side and don’t give it much thought. This year I looked at the renewal notice because I’ve been getting calls from the insurance broker that insures my cars asking me to consolidate my homeowners’ policy.
It turns out that the premium on my existing homeowners’ policy is going up by 10%! I was shocked and pulled out the previous year’s renewal notice and it too was an increase of 10%. In the two and a half years I’ve owned this house my insurance company increased my premiums by a total of 21%. I have no idea how they justify a 21% increase. House prices have not increased by that much and I can’t see my home and neighborhood being that much risky in two and a half years. Needless to say, I called the broker who provides my car insurance and asked for a quote.
After a ten minute phone call and a fax of my current policy to the other insurance broker, I had a quote. Here is what the company that insures my car quoted me:
- Coverage for the exact same perils
- Same deductible
- The provided a blanket liability coverage for my home and cars
- Identity theft protection
The same policy plus a few extras resulted in a 15% DECREASE from my current premium. To top it off (it gets even better), my homeowners’ premium will be decreased by 5% this year and a further 10% next year. In addition, they are going to reduce my car insurance premiums by 5%.
The decision was an easy one. I took their offer and my existing policy will lapse. I also fired the insurance broker who sold me the policy in first place. This guy was looking for easy commissions with little service.
Mortgage Update May 2008
I thought that since I promoted a method of paying down my mortgage faster I should give regular updates on my progress.
I took out a $210,000, year mortgage amortized over 25 years at 5.15% back in December 2006. The monthly payments are $1,239.36. The mortgage would be paid off by December 2031.
When I negotiated the mortgage with my bank, I asked to make weekly payments of $309.84 ($1,239.36 / 4) to accelerate my principal payments. The change from monthly to weekly payments changed my pay off date from December 2031 to August 2028. This reduced my payoff date by 3 years and 5 months and saved me $27,000 in interest.
I made a lump sum payment of $1,600 on December 10, 2007 reducing the term by 3.5 more months and saving me $3,088 in interest.
My Mortgage Balance
Since inception we haven’t made any other changes to our mortgage other than make the regular weekly payments and our balance as of May 31, 2008 (according to my bank statement) is $199,781.
Changing My Mortgage Payments
From my prior post you’ll see that I’ve been entertaining some offers at the office. I had a performance review for my current role and received a raise of 5.3% and I’m calling the bank tomorrow to ask them to increase my weekly mortgage payments by 5.3%!
This will save me another $10,000 in interest and shortens the term by another 79 weeks. The total term of the mortgage is now down to 19.6 years and should be paid off by June 2026.
Related Posts
Deciding Which Job Offer To Take
I’ve been considering a new position at my company but have had some reservations. In my current role, I hold an executive position and have responsibility for a specialized team. Because this position is an executive position, I am privy to information provided to other managers at the most senior levels and have some of the perks available to executives. However, my position does not provide the best compensation and I am the lowest paid executive in senior management.
The structure of this company is different because there are non-executive line jobs that pay much more than I receive now and have the opportunity to participate in larger bonuses than I take now. So I’ve considered a move down in position but up substantially in pay.
The decision is difficult because in the next year or two I could conceivably receive the same pay if I stay in my role. If I leave they will replace me and change the role so that they would need to pay my replacement probably what I’d get in my new role. To compound this, I’m not all that interested in the work in the new role: It’s more specialized that my current job and does not afford me the perks of my current position. But it does offer ten to fifteen thousand more a year in salary and another six to ten thousand in bonus. As I struggle to keep my large family afloat, the compensation in intriguing.
I’m leaning towards staying in my current job and asking for a promotion.
What would you do?
Retirement Planning - Do You Have A Retirement Plan?
CNN reported recently that many Americans are getting worried that they won’t have enough saved for their retirement. The biggest concerns appear to be health care costs, lack of or modest savings, and unrealistic expectations of how much they will spend in their retirement.
By staring early and with some retirement planning, you can ensure you sock enough away for that fateful day when you are ready to leave the workforce. If you are a baby boomer and fall into the group that has modest savings and no retirement plan, then you have little time to lose!
Here are some retirement planning questions to help you establish a realistic retirement goal:
- When do you plan on retiring?
- How much money do you thing you will need in retirement? Be realistic here: Will you still have a mortgage or car payments? Will you have other debts? What exactly will you spend less on and what will you spend more on?
- What do you anticipate your social security benefit to be?
- Based on the answers above how much money will you need to accumulate before retirement?
Here are some retirement planning tips to help you achieve your goals:
- If you are not participating in your employer’s pension plan, join!
- Maximize your 401K and IRA plans.
- Invest in long-term investments and avoid short term liquid investments. Stocks have more risk but better return over a longer period than bonds or CD’s.
- Avoid withdrawals from your retirement plans as there may be penalties.
- Diversify your investments across industries and across boarders.
If you are trying to figure out your financial situation a good record keeping system can help. I use Mvelopes Personalon-line budgeting service. It has some great features and is accessible from wherever you are. You can try other programs like Quicken
. They work just as well but I personally recommend Mvelopes Personal.
Money Making Tips For Kids
So your child has been thinking of ways to raise some money and comes to you for some ideas. Perhaps they have thought of the age old lemonade stand, a newspaper route or even soliciting the neighborhood for bottles and can to return for the deposit (where available). But what can you suggest to provide some longer term tasks that help apply your child’s talents. There is an also opportunity for your child to learn entrepreneurship as well as learn to save and invest wisely.
Here are some ideas you can use to brainstorm with your child when they get the urge to earn:
1. Babysitter - In some states there are babysitter courses available for young people. The child requires some level of maturity before they can babysitter but nonetheless babysitting is one of the top job for kids.
2. Tutor - Does your child do well in school? Perhaps they can turn their talent for learning into a part-time job helping out other children in the community. They can help those in the same grade or in the lower grades who are struggling with schoolwork.
3. House & yard clean-up and help - There are many people who would love to have some help. As out population ages, this opportunity is gold for the motivated child. Be warned though it can be hard work!
4. Grass cutting, leaf raking, and snow removal service - Offer year round services. Cut the grass weekly in the summer and shovel the snow in winter. Some adults do this full time!
5. Bike trader (buy and sell used bikes) - Perhaps your child knows how to fix bikes. They could pick up old bikes in need of service cheap at yard sales, fix them up and re-sell them for a profit. It requires more investment and time than other jobs but it can be rewarding.
Some other jobs kids can do to make money include
- Car washing
- Gift wrapping
- Computer teacher
- Dog walker
- Pet babysitter
Encourage Savings
If you child has made some money of their own for spending money, let them enjoy the benefits of their labor. They should be able to go to the local grocery or corner store and make a purchase. They will receive the instant gratification they are seeking. But also have them place a portion of their earnings, say half, into a savings account and show them how their money will grow over time.