How to Know If a Reverse Mortgage is Right for You

You can’t watch TV today without seeing the ads for reverse mortgages.  But what are they and more importantly how can they help?  While it seems like reverse mortgages are fairly new, they have been around since the 1960’s.  The concept is rather simple, seniors over 62 can tap into the equity in their home while freezing mortgage payments until the time you move from or sell your home.

OK, this sounds like a good deal.  But how do you know if a reverse mortgage is right for you?  Well, this article will take a deeper look.  This way you can decide is this option fits into your retirement plans or not.

Reality of Today’s Seniors

For today’s seniors, it is the best of time and it is the worst of times.  On the one hand, we are living longer, more active lives and this means that we can truly enjoy our retirement.  Today’s seniors have also had to live through one of the most volatile economic periods in the history if the U.S.  

When times are good, they are very good.  The stock market soars, home prices soar, and we are all richer – at least on paper :-).  But when times are bad, they can be very bad.  Uncertainty has hit the job market and the promise of lifetime employment is long gone.  

In addition, today’s seniors have had to live through the combined blows of the dot-com collapse the financial crisis.  These twin crises have had a profound impact on the retirement plans of millions of Americans.  As such, many have begun to consider the possibility of using a reverse mortgage to help to pay for retirement.

Reasons to Get a Reverse Mortgage

When is the right time to get a reverse mortgage?  While there are no fixed rules, some potential answers include when you need extra money to cover retirement expenses, when you want to purchase a home for retirement, or if you want to set up a rainy-day fund.  

Again, the answer will come down to the specifics of your situation.   The one thing to know about a reverse mortgage is that the option will allow you to access funds without having to pay any debt service costs over the life of the loan.  

Instead, the principle and interest will accrue over the life of the loan and then the loan will be repaid once you either sell or move from your home.  While this sounds like a great deal, a reverse mortgage is not exactly free money.  To keep the loan current, you need to remain current with your homeowner’s insurance policy, property taxes, and utilities.  

So, back to the reasons to get a reverse mortgage.  The answer lies in how secure your retirement plan is.  If you are looking at significant shortfalls, then you might want to consider a reverse mortgage to help.

Advantages and Disadvantages

As mentioned, reverse mortgages are not free money.  In fact, these loans include requirements such as income verification, insurance coverage, and the need to properly maintain a home.  The latter might be a challenge for borrowers who are not in good health as failure to maintain their home could lead to foreclosure.

In addition, having a reverse mortgage does complicate a borrower’s wish to bequeath their home to their heirs.  The reason is that the bank which issued the loan will essentially hold the first position when the will is read.  As such, a borrower’s heirs must either pay the remaining balance due on the home or agree to let the bank sell the home before they can inherit any residual value.

However, this does not mean that reverse mortgages are bad.  There are instances when getting a reverse mortgage does make sense and a complete list of advantages and disadvantages can be found here.  

One major plus with a reverse mortgage is that the Government has made it harder for a borrower to be ‘under water’ on their loan.  This is a big plus as it makes it harder for a borrower to owe more on a reverse mortgage than their home is worth.  However, the guidelines which protect borrowers also placed strict limits on how much can be borrowed.  

Conclusion

In the right circumstances, a reverse mortgage can make sense.  However, you want to make sure that you have a clear understanding of your retirement plan and how a reverse mortgage will fit in.  This will help you to make the right decision when it comes to leveraging your home to pay for your retirement.

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Top 5 Budget Busters and How to Fix Them

Even if you’re not going on outlandish or lavish shopping sprees, your life is probably already very expensive. It’s amazing how even the most basic and important necessities like heat and running water can add up so quickly! In the interest of trying to live a more frugal lifestyle, we went hunting through our homes to identify the biggest “budget busters” and the best ways to fix them. Here is what we found.

Utilities

Yeah, yeah, you’ve already stopped using lightbulbs altogether and you built a fire pit in your yard so you’ll never have to use the oven. We’ve been there. But guess what?  There are ways to still love and use modern conveniences without having to fork over a sizable chunk of your paycheck every month. Here is one of them:

Switch providers – if you’re lucky enough to live in a state that has deregulated its energy market, switch to a provider that offers you better rates. For example, Green Mountain in Corpus Christi, TX offers a green energy plan that starts at less than 9 cents per kilowatt hour. Do you know what your rates are? You should make sure you aren’t being overcharged and, if you are, make the switch.

Phone Service

In today’s landscape, it is the landline not the smartphone that is considered “optional.” So don’t listen to anybody telling you to give up your mobile device to save money. In fact, there are many ways that having a smartphone can help you save money, but that is a post for another time. If you really want to save money on your phone service, bundle it with your internet services. Many companies offer lower rates for people willing to bundle their services into a single package. Another option if you must have a landline is to bundle that with your mobile service.

Another option–and this is a good idea for people who work from home–is to get a free phone number from Google Voice. You can forward the number to your mobile device, or call people over the web. It saves you the cost of multiple phone numbers and multiple devices while giving you a secondary number and all for free!

Ditch The Cable

Yes, do this even if you are someone who loves to watch programs live. When you ditch your cable subscription you don’t have to pay for a set top box, DVR, etc and their associated fees. If you hate the idea of missing your favorite network shows as they air, you can get the digital antenna to get the network channels for free (well, the box comes with a one-time fee).

The simple fact is that there are enough streaming media services out there now that you can watch pretty much anything you want whenever you want to watch it. And even if your network doesn’t send recent releases to Hulu or Netflix, you can usually watch the latest episodes on the network’s website.

One thing we are going to caution against, however, is the purchasing of a season of currently airing television. Most seasons will go on sale once they’ve wrapped up their episodes. Currently airing season passes cost much more than you would pay if you waited to buy them until the next round of shows are released.

Insurance

Homeowner’s insurance and car insurance can be very expensive if you purchase them separately. It is better to bundle them together through a single provider. Check out this article where I cover my top tips for saving on insurance.  Why do you save when you bundle your insurance? Because most insurance providers offer special discounts and deals to customers who are willing to bundle their insurance services into a single policy. Shop around for the best deal.

Food

Don’t worry, we aren’t going to advocate that you adopt a ramen-based diet. Far from it! The higher the quality of your food, the healthier you will be and the better you will feel. And eating good quality and nutritious food isn’t as difficult as you might think. Pick up a copy of Good and Cheap, a book that was written to help families on food assistance programs create awesome meals on four dollars (or less) per day. The other great thing is that when you pick up a copy of the book one gets sent to your local food pantry!!

Top 5 Budget Busters and How to Fix Them – Final Thoughts

There are so many ways to save money on your basic necessities. It can be hard to find them, though, especially if you already feel like you’re living on a bare bones budget. Use the tips we’ve shared here to help you save even more money and maybe even create some wiggle room for fun in your budget!

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When Getting a Home Warranty Makes Sense

Are you one of those homeowners who has nightmares about a crippled heating system? Maybe you’re thinking of buying a house, but you’re worried about all the components that could break.

If either of these describes you – or even if you’re somewhere in the middle – you might want to consider a home warranty. It’s a protection plan that helps homeowners deal with crises big and small.

Home warranties are very specific documents. Before you decide if one is right for you, you should understand what they do — and don’t – include.

Home Warranty Basics

A home warranty is a service contract, not an insurance policy. A warranty won’t protect against theft, fire or flood damage. The policy only kicks in when something goes wrong with an item covered in the contract.  

Warranties are usually in place for a year, and renewing is an option. Policies for brand new homes often come with additional years of coverage for structural components.

Coverage typically includes most large kitchen appliances (such as an oven), sump pump, water heater, ceiling fans, and parts of heating and electrical systems. Extra coverage is often available for refrigerators, washers and dryers, swimming pools and septic systems.

A policyholder calls the warranty company when there’s a problem. The company then sends out a technician who’s under contract. Homeowners don’t have free reign to choose service providers.

With a warranty, the emphasis is on fixing the problem, not replacing the malfunctioning unit. Homeowners must pay a $50 to $75 service fee each time a technician shows up. The policy itself costs between $350 and $500, and enhanced policies tack on an extra hundred dollars or more.

An important note: Home warranties usually don’t apply if there’s a preexisting problem or an improperly maintained device. These exceptions are stated within the contracts.

It’s important for homeowners to be familiar with their home warranties, so be sure to read it carefully and completely. Frustration and disappointment are common when people make assumptions about what’s covered.

Home Warranties for New Homes

If you’re buying a brand new home, a warranty could be very helpful. There are variations, but often there’s a builder’s limited warranty and a limited warranty on certain structural components.

The builder’s warranty focuses on workmanship and materials. This covers many of the small but annoying problems new homes sometimes face, like squeaky floors and nail pops.

A new home’s systems should be in great running order. To be on the safe side, its warranty includes components such as HVAC ductwork, electrical wiring and the septic system. Structural warranties handle issues such as cracks in concrete floors.

Some lenders, including the FHA (Federal Housing Administration) and VA (United States Department of Veterans Affairs), mandate specific requirements for home warranties. If your financing institution has such rules, be sure the warranty companies you check out fit the bill.

Home Warranties on a House for Sale

It may seem strange to buy a warranty when you’re putting your home on the market. However, home sellers discover that a warranty performs a double duty.

The warranty could protect the seller from costly repair work on their older appliances. Who wants the expense of a new water heater, especially when you won’t be around to enjoy the benefits?

If a warranty can be transferred to the buyer, it’s a good selling point. In some regions, such as in California, it’s common practice to offer a warranty during a home sale.

Lucky homebuyers receive warranties as gifts from their real estate agents. That’s a pretty nice “thanks for choosing me.”

Home Warranty Extension

Buyers who purchase older houses that come with warranties sometimes choose to extend those contracts when the original period is over. They appreciate having a go-to number to call at any time, at any hour.

Emergency services are generally available, even after hours. If your crisis happens late at night or on a weekend, you know someone will show up – as long as the problem is covered under the warranty.

Home Warranty Peace of Mind

Home warranties can be security blankets for homeowners who are worrywarts. The policies offer comfort, because if there’s a serious complication, you know help is a phone call away.

A warranty is also a convenience for less serious troubles. You don’t have to spend time finding a reliable plumber or a HVAC technician. The warranty company has service providers already lined up.

Homeowners sometimes put away a little extra in savings in case the air conditioner dies, there’s a plumbing leak or “insert your most feared home disaster here.” However, not everyone is able to develop that little nest egg.

When Getting a Home Warranty Makes Sense – Final Thoughts

A home warranty can be a big help if something goes wrong when your bank account is humble. Just remember, though, that only those situations listed in your policy are covered. Read it, learn it, know it.

Anum Yoon is a personal finance blogger and writer. She created and maintains her personal finance blog Current on Currency. You can subscribe to her blog newsletter right here for her weekly updates.

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Difference Between Home Insurance and Home Warranty

Your house might be your biggest purchase in your lifetime, so it’s important that you protect it. And how do you do that? – By investing in home insurance or home warranties, or both.  But, what’s the practical difference between home insurance and home warranty?
These two are often mistaken to be one and the same thing, but they are different from each other and provide different benefits to the homeowner. They also differ greatly in cost, terms and conditions, and coverage. In some of cases, home insurance may be mandatory but home warranty is an option, albeit a recommended one by some.

Home Insurance

This policy covers accidental damage to the house and your belongings that are caused by storms, theft, fires, and certain natural calamities or disasters. The four areas usually covered by the home insurance policy are the house’s interior and exterior, general liability protection e.g., coverage when someone is inured inside your property, and personal property in events of theft or robbery.

Home insurance is almost always mandatory if you have a home mortgage and is thus regulated by some state authorities. A bank generally requires someone buying a house to obtain this policy before it issues a home mortgage. This policy is renewed every year with an annual cost of $300 to $1,000.

To explain how a home insurance policy works, an example would a water pipe breaking and flooding the kitchen. The insurance adjuster will assess the scenario and will fill out the claim for replacement and repair of the damaged items in the house. When the insurance company approves the claim, they will deduct the cost of the deductible and issue the balance payment for your home repairs. This deductible helps lower your annual policy premium. A higher deductible means lower cost for the annual home insurance policy.

Home Warranty

On the other hand, this is a contract for the service, replacement, and repair of your appliances and certain system components that break down or fail because of age or regular wear and tear. Common components usually covered by this policy are electrical, HVAC, plumbing, washer/dryer, and kitchen appliances. Some insurance companies may also cover bigger systems like pools or spas.

Typically, home warranty contracts have-12 month terms and are not a requirement when obtaining a mortgage from a bank. Although highly recommended, getting a policy is an option left to the home buyer. System plans can be purchased for $75 to $100 a month. Additional coverage can also be purchased for other items.

For example, the HVAC system in your house stops working. An affiliated technician will come to assess the issue. If he decides that the system no longer works due to wear and tear, and it is covered by the service contract, he will make the necessary repairs or replace the system or appliance. This will supposedly only cost you the price of the service call which is typically below $125. The insurance company covers the rest of the cost if approved.

Difference Between Home Insurance and Home Warranty – Which One Should You Get?

As mentioned, in many cases having home insurance is mandatory.  So, it is likely you should already have a home insurance policy now! The cost is minimal compared to the benefits that the coverage provides, especially in events of natural calamities. But how about home warranties? Is it really a good decision to get one?

If your appliances are relatively new and are still covered by manufacturer’s warranties, you may opt to have them excluded from the items covered by your insurance policy.  Also, if you have a nice emergency fund built up, home warranty policies are almost always NOT a good use of your money.  

Having the newer appliances excluded from a home warranty polity could help to keep the home warranty policy costs lower. But if the appliances and systems that came with your house are aging, a warranty contract might be a wise investment. Appliance repairs can shoot up to thousands of dollars while a monthly cost of home warranty will only set you back $100 per month.

My Experience with Home Warranty Plans

I have had two experiences with home warranty plan claims.  In both cases, the home warranty plan was basically worthless for me!

1. Hot Water Heater failure – We bought a house that was ~10 years old and it came with a “free” home warranty plan.  The water heater began leaking, and it was clear that it would need to be replaced.  The home warranty plan covered the new water heater, but I had to use an “approved” installer.  At the end of the day, the bill was around $350 to me out of pocket.  I could have installed a nice hot water heater myself for less than that!  The real annoyance was that the Home Warranty company would NOT pay for the $75 disposal fee of the old hot water heater.  WTF???
2. Refrigerator In-door Water Dispenser Issue – When we purchased our second home, it again came with a “free” home warranty plan.  After several months, we noticed that the in-door water dispenser would not work properly.  I googled around a bit, and it seems that this model has an issue with the water line freezing up as it runs through the freezer door.  I called the home warranty company, explained the problem IN DETAIL, and they agreed to send someone out.  Google said the problem could be fixed by installing a small heat tape type of device for ~$100.  Once the repair guy got there, I was given the news that they WOULD NOT cover any repair on this as it was a failure in the insulation of the door.  They considered this a manufacturing defect.  The final rub was that they wanted to charge me $75 for the service call when nothing got fixed!  I told them where they could stick their $75 bill!!!

Bottom line – for me based on my past experience, a home warranty plan is not a wise investment.  I will never invest in a home warranty plan personally.  But, your mileage may vary.  For those without an emergency fund or limited repair skills (I just use YouTube and look for DIY videos :-)) a home warranty plan should be considered.  Does anyone have pleasant experiences with home warranty plans?

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Expect the Unexpected – How to Deal with Unexpected Expenses

We all have to deal with unexpected expenses that can pop-up at the worst possible time. Life is unpredictable, and you never know when your washer or dryer will stop working suddenly, or when your car will have so many problems at once that an honest repair shop will advise that it’s not worth fixing. When this happens, it is important to remember that these things happen to everyone. It is also helpful to remember that there are ways to take control of even the most unexpected expenses before they even arise. Here are two awesome ways to do just that.

1. Get a home warranty

A home warranty can help offset unexpected costs by making your actual expenses more predictable. You pay a monthly fee for the warranty itself, and when a household appliance or system breaks, you know exactly how much you’ll have to pay to fix it before it even breaks.  These policies vary in what is covered. Some plans cover systems only, and other plans will cover things like washers and dryers, stoves, ovens, refrigerators, dishwashers, and even built-in microwaves. Some will replace the appliance for free if it cannot be repaired, and these plans pay for themselves rather quickly for many homeowners. System plans generally only cover things like plumbing problems, but they can be a real life saver when you’re confronted with burst pipes and other plumbing horrors. These plans must be purchased before a problem occurs, though. Knowing that the unexpected is inevitable, it makes sense to get one if you haven’t already.

Remember, however, that these home warranty companies are there to turn a profit!  Over the long-run, you will be better off saving up for an emergency fun.  But, if you are not disciplined at saving, a home warranty could be the way to go.

2. Refinance your auto loan

Auto loans generally give you two to five years to repay them, depending on the financing terms you chose when you applied for the loan. Sometimes it makes sense to refinance to get lower monthly payments, or to be able to purchase a second vehicle unexpectedly if your old one cannot be repaired. This is also a good way to get finances in check again after dealing with unexpected expenses that have thrown a budget off track. When this happens, looking at a auto loan refinance usually makes good sense. It can mean agreeing to new terms that are more manageable or that are more favorable to the borrower. For many people, life situations can change drastically during the two to five years it takes to pay off a car loan. A refinance can free up money in your budget, or it can help you get out of debt faster.  This is especially true in the low interest environment we find ourselves in today.

Because interest rates vary over time, a car loan that was taken out three years ago may have come with a higher fixed interest rate than a car loan would today. Perhaps interest rates in general are lower now, or maybe your credit score has improved significantly since you bought your car. A refinance can put extra money in your pocket over time so that you can build up an emergency fund to help deal with expenses that couldn’t be planned for in advance.

Expect the Unexpected – How to Deal with Unexpected Expenses – Final Thoughts

We all have to deal with the unexpected from time to time, and our finances can take a serious hit when that happens. Planning for these things in advance is not always possible, but being prepared for when they arise is achievable. It’s a great feeling to have proactively taken steps to prepare, such as knowing the fixed costs that will be associated with any given home repair, or understanding that the car loan can be refinanced in order to meet new and changing needs or goals. Because we all deal with unexpected costs, it doesn’t have to be all that surprising when they pop up.

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Are You Prepared for These Financial Emergencies?

It happens every day. And if it hasn’t happened to you yet, be sure that it will. Emergencies can’t be anticipated. That’s why they are emergencies. Sure, you can set funds aside for an emergency fund, but it’s impossible to prepare for emergencies of a certain magnitude. Sudden and/or prolonged medical emergencies, lawsuits, and lengthy loss of income can all be eventualities that quickly deplete even hefty emergency funds. If you find yourself in one of these or a similar situation, you need cash in your case, whatever that case may be. Here are the most common financial emergencies that affect people of all walks of life. By looking at likely emergencies, you have a much better chance of protecting yourself in case one of these pops up in your own life.

Marriage

While not an emergency per-se, this most joyous of events can bring with it many unforeseen financial difficulties. This is especially the case if one partner, but not the other, has significant debt. The best plan is to look these realities square in the face before you get hitched. Make a plan for how you will work together to eliminate this debt. Then stick to it, year-in and year-out, until the debt is gone. By working together, you’ll strengthen your marriage, as well as your credit score. This will help you avoid another money-pit: divorce.

Losing a Job

It can happen to anyone. Maybe it has already happened to you once or twice. If it has, remember how difficult it was. If it hasn’t happened yet, trust me, it’s no fun. Combat the stress and uncertainty of sudden unemployment by having a reserve fund set aside to cover up to 6 months of bills, food, and sundry expenses. This will be a huge load off your mind. Maybe you won’t even have to use it!

Acts of God

Natural disasters are tricky. It pays to know if your area is flood-prone, earthquake-prone, or tornado-prone. Have the appropriate owners or renters insurance at the ready. It pays to prepare for even unlikely events. If you stand even a small chance of having your home ruined by a hurricane, get the available insurance. It doesn’t cost a lot, and you will thank yourself profusely if you ever really need it. You can also avoid these things by living in a place that doesn’t suffer from many of these types of natural disasters in the first place.

Bankruptcy

This is a big one that can mess up your plans for many years to come. It happens to lots of people in different walks of life, from rich to poor. Prepare for this by trying to make sure it never happens. Use only about 30% of your available credit limits. Save and invest your money wisely. Don’t nickle and dime yourself into poverty by spending all your disposable income on disposable pastimes. If you encounter your first financial emergency with money ready to deal with it, you’ll be much better off in this regard.

Are You Prepared for These Financial Emergencies – Final Thoughts

This is just a sampling of the kinds of financial crises that impact consumers like yourself every single day. If you are reading this, don’t just walk away hoping one of these events may never happen to you. Very likely, at least one of these will happen to you in your lifetime. And you can be prepared. With some small life and attitude adjustments, you can enjoy the peace of mind that accompanies readiness for the future.

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Insurance Company Bait-and-Switch

My home insurance company is trying to screw me and hope that I won’t notice!  I thought I would share this fun experience with you so that you don’t fall prey to the same types of shady bait-and-switch type practices.

Insurance Company Bait-and-Switch – Background

If you will recall from a post I wrote about one year ago on my quest to save on car and home insurance, I switched from State Farm auto and home insurance to Progressive auto and home insurance.  In the end, I was able to save about $475!  I was super stoked about such a large savings.  But, what is too good to be true?

Insurance Company Bait-and-Switch – Home Insurance

Progressive provides home insurance to me through a third party company named Homesite insurance.  They seemed like a fine company to me at the time after a little digging around.

After all was said and done, we ended up paying $732 a year for our home insurance.  This gave us coverage at the proper level for our home and all was well,

Insurance Company Bait-and-Switch – The Friendly Letter

Just a few days ago I received a rather large letter in the mail from Progressive.  I thought it was junk mail and nearly threw it out, but I decided to give it a quick open just to confirm.  It was a good idea not to toss it  because the papers were the summary of the renewing home owners insurance policy.

Everything looked fine from what I could tell until I got to the third page.  The total price to renew the policy is now $998.  WTF?!?!?!?  You are telling me that the price of the exact same home owner’s insurance policy has gone up $266 or 36%?!?!?  What kind of madness is this?

Insurance Company Bait-and-Switch – The Call

So, I decided to call 1-800-PROGRESSIVE and get this little detail sorted out.  Simply put, there is nothing they can do to lower my premium.    I have to either “eat the increase” or shop around with another company.  The person on the phone tried to tell me that there was a potential “increase in my area” due to an increased level of claims.  Ummmmm – yeah right

Insurance Company Bait-and-Switch – Final Thoughts

For me, $266 is too much to leave on the table without trying to look for an alternative, cheaper insurer.  It looks like I will mobilize to beat the insurance bushes again and look for a car and home insurance combination that will hopefully break even compared to what paid for the previous year.  Why do insurance companies make us go through this bullshit every year?  It seems like their costs would be lower overall if they just took care of their current customers.  Am I wrong?

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Find A Competent Insurance Agent

The following is a sponsored post:

A reasonable approach to personal finance is to examine the insurance coverage that you carry on an annual basis. This will ensure you have the proper amount of coverage and that you are not over-paying for the coverage amount that you’ve settled on.  Insurance coverage as a whole cost the average family over $5,000 in 2012 according to the Bureau of Labor Statistics!  This substantial annual investment should be considered carefully with the assistance of a good insurance agent.  I prefer to handle all of my insurance needs through the internet/phone for time efficiency, but some folks still like the personal touch of sitting down with someone to discuss the best coverage for them.  This also gives a chance to ask any questions that are on your mind.

Find a Competent Insurance Agent – Points to Consider

Types of insurance provided that you should discuss with your insurance agent or consider are

• Automobile insurance – Liability coverage to comply with laws, physical damage coverage for the automobile, as well as uninsured motorist’s protection to protect you against legal liability and damage to your property.
• Homeowner’s insurance – Whether you own your home or rent, you’ll need to protect yourself against loss due to loss of your home, the property contained in it, and your legal liability should anyone be injured as the result of carelessness on the property you own or control.
• Boat and RV insurance – If you own a boat or RV, you will likely need this type of insurance.
• Umbrella Insurance – This is a type of insurance policy to protect you in the event that your legal liability exceeds your limits of liability on the primary automobile, homeowner, boat, or RV you own.  It’s wise to request this type of coverage if you have a large net worth and desire to protect it from risk.
• Life insurance – Everyone should be familiar with what life insurance is.  Read my post titled Ensure You’re Not Over Insured for more details on how to determine the right amount of life insurance for you.
• Flood insurance – This covers you financially if your home encounters a flood.  Consider this type of insurance if you qualify and it is necessary. A coastal area such as North Carolina, Virginia, etc. has insurance challenges that may be addressed only by a knowledgeable insurance agent.
• Health and disability insurance – This is another type of insurance that you may consider.  Read my article titled: Do You Need Short Term Disability Insurance? to learn more.

Find a Competent Insurance Agent – Final Thoughts

A competent and reliable insurance agent can provide families with savings on insurance premiums and ensure that you have adequate protection from life’s risks. If you are looking for a more personal touch, then a qualified agent can be a great resource for you.  They can envision necessary protection from catastrophes that may occur to you or your property. If you happen to live in Wilmington, North Carolina, then click here to find insurance agent through the listings provided in this link.  Insurance agents can examine your insurance portfolio to advise you about amounts of coverage needed, types of coverage needed, and reasonable places to purchase that insurance.

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These tips can help you save on car and home insurance when switching insurance carriers!

I recently did a post on my Quest to Save on Car and Home Insurance where I was able to save $475 a year by switching from StateFarm to Progressive.

Here are some quick money saving tips for car and home insurance that I learned along the way that may help you save some time and money!

Quick Money Saving Tips for Car and Home Insurance

Here are some quick tips I learned on my quest to save on car and home insurance that you may find helpful:

• Shop Around for different insurance companies every year: We hadn’t shopped around in ~15 years.  As a result, we’ve thrown away thousands of dollars by not looking for the best deals on car and home insurance.  The same things applies to a lot of services such as cable, phone, and internet.
• Don’t go with high deductible options:  You will almost always come out behind in the LONG run unless you are incredibly lucky.  Why risk it?
• Make sure your home is insured for the right amount:  Our home was under-insured by ~$175,000!  If something major had ever happened, we would be completely screwed.  The coverage cost should be based on the cost to rebuild NEW – NOT the mortgage price or market value of the house!  This was confusing to me at first because we had it insured for close to the market amount.  After reading about this for 2-3 hours, the proper way to insure a house is ALWAYS for the amount to rebuild it from scratch (including debris removal) – NOT the market value of a similar house.
• Try to get at least 4 different quotes: Progressive was the last company I tried, and they were hundreds less than the others.  Others to check out include: Geico, StateFarm, and Nationwide.  Don’t stop at just 2 or 3 quotes!
• Bundle Car and Home insurance to get the cheapest rates: this one is pretty self explanatory, you’ll save ~$50 – $150 by bundling car and home insurance with the same company.
• Pay the 6 months at a time for car insurance vs. monthly: I am saving $52 a year by paying every 6-months vs. monthly ($27.06 every 6-months to be exact). You’d have to earn nearly 12% interest with zero risk on your money to outperform this tip (assuming you have the cash to cover the expense).
• Try the new Snapshot device: Progressive insurance (I think some of the other insurance companies have similar devices) has this new type of device that you can plug into your car’s diagnostic port in the steering wheel.  It measures the miles you drive, the time of day, and the number of times you slam on the brakes.  If you drive less than 50 miles a day, stay off the road between midnight and 4am, and don’t slam on your brakes, they can reduce your premium by up to 30%.  I decided to give it a try, so we’ll see how it goes!
• Let your home insurance company of major repairs: Have you recently replaced your roof, home wiring, added a security system, etc. ?  If so, let your insurance company know – you could get a nice premium deduction! (idea from Daisy @ www.prairieecothrifter.com)

Final Thoughts

Those are my best quick money saving tips for car and home insurance savings.  I developed these on my quest to save on car and home insurance that netted me a savings of $475 a year (read about it here).  Does anyone else have other car/home insurance money saving tips that I’ve missed?!?

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So, you want to be an insurance shopping hero?

As you may have read in my June 2013 Report, one of my goals for July was to switch car and home insurance providers to save an estimated $500+ a year.

Read on to see how much I was able to save with about two hours of work that included getting on-line quotes and speaking with insurance reps.

Money Saving Breakdown – The Quest to Save On Car and Home Insurance

• Difficulty (Super Easy/Easy/Medium/Hard/Expert): Medium
• Average Savings per Year ($/year): 475
• Time Required (mins): 120
  
• Savings for your time ($/hr): 237

Switch to Geico and Save 26%!

Could it really be this easy to save hundreds by switching from StateFarm to Geico as the commercials suggest?  We’ve been with StateFarm insurance for about 15 years, and we always assumed we were getting a pretty good deal with them.  Well, as I’ve come to find, you know what happens when you ass-ume…

Well, the online rate quotes for Geico.com showed that I could save ~26% (or $431) if I switched our car and home insurance to Geico .  We have a 1997 Toyota Camry and a 2004 Toyota Sienna, and our home is insured for ~$300,000.  The plan was to get comprehensive and collision on the Sienna and just the bare minimum on the Camry.

I spent a fair amount of time trying to decide if we should go with the higher deductible to save money or go with the same $250 for car and $1,000 for home deductibles that we had been using.  After some great input from my wife, we decided to keep the deductibles where they were.  Read why we made this choice here: Does High Deductible Car or Home Insurance Actually Save Money?  This brought our calculated savings down a bit, but it was still going to be in the $400/year range.  Great!  Where do I sign up?

Home Insurance Rates Too Good to Be True?

I called up Geico and registered for car insurance.  It was easy and the process took about 10 minutes.  The rep then transferred me over to the home insurance division.  After a series of questions, it became apparent that I would be charged a much higher rate for the home insurance than I was quoted on the Geico website (see the table below).  The problem was, I used the same amount of home coverage as I had with StateFarm.  Apparently per Geico’s calculations (this also matches up with Nationwide and Progressive), I needed ~$175,000 more insurance coverage to completely cover rebuilding the home based on the square footage.  Great!  We’ve had our home under-insured with StateFarm for the past ~2 years, and they’re charging us and arm and a leg for it!  After Geico re-ran the numbers, it turned out that I’d only be saving ~$173 per year if we made the switch.  That’s pretty good, but not good enough for MoneyAhoy! After thinking it over for a couple of hours, I called back Geico and canceled my car insurance (sticking with StateFarm until I could find a better deal).

Plan B: How Did I Save on Car and Home Insurance

I shopped around with a couple other insurance carriers and actually ended up with the best rates (by far) from Progressive (see the table below).  Their phone rate matched their on-line rate, and I was setup with my new car and home insurance in about 27 minutes of phone time.  I was able to save a total of $474.82 a year, keep the exact same auto coverage, and increase our home coverage from $300,000 to $475,000 so that we’d be properly insured if our home experienced major damage.  Not too shabby!

Final Thoughts

The quest to save on car and home insurance ended happily.  It was pretty easy to switch over to Progressive, and all the agents I dealt with (at StateFarm, Geico, and Progressive) were all very friendly and courteous.  The entire process took much longer than I anticipated (research and phone time was about 2 hours total), but the savings were well worth it.  Where else are you going to get $237 per hour of your time?

The post The Quest To Save On Car And Home Insurance appeared first on MoneyAhoy.

For more saving money, making money, and investment ideas go to www.MoneyAhoy.com