How to Save Money on Your Auto Insurance

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You may have good reason to complain about the cost of your auto insurance, but have you tried to do anything about it? If you're resourceful and willing to do a little homework, there may be plenty of ways to lower your premium. And we're not necessarily talking chump change--a few simple steps can sometimes save you hundreds of dollars a year.

Shop around

One of your first steps should be to shop around for a better deal. Sometimes the best time to do this is when your current policy is up for renewal--especially if you find that your premium has gone up. You may be surprised to learn that premiums for the same coverage on the same car can vary widely among insurance companies, even in states that regulate auto insurance rates. That's because different companies have different ways of pricing coverage and determining rate increases. You can shop around on your own over the phone and on-line, but it's usually easier to have your insurance agent or broker do the legwork for you.

Raise your deductibles

When you file an insurance claim for loss of or damage to your car, you will probably be subject to a deductible. This is an amount that you must pay out of your own pocket before your insurance company begins to cover your losses (different deductibles probably apply to your collision and other-than-collision coverage). The higher your deductibles, the lower your annual premium. In fact, by raising the deductible for your collision and/or other-than-collision coverage, you may be able to cut your premium by 10 percent or more. The reason is simple: Increasing your deductible shifts some of the financial risk to you. If you decide to do this, though, make sure that you can afford the larger deductible if and when the time comes.

Downgrade your choice of car

New cars and top-of-the-line models typically cost more to insure than used cars and lower-end models. In addition, cars are rated on a risk scale for insurance purposes. Sports cars and other high-performance vehicles are higher risks because they are popular targets for thieves and vandals and typically cost a lot to repair. Also, statistics show that people who own flashy cars tend to drive more recklessly. Other types of cars may be considered safety risks (e.g., if they're prone to rollovers). So if you're in the market for a car, remember that you can save on insurance by purchasing a low-risk or less expensive vehicle.

Look into discounts

Depending on your circumstances, you may be eligible for one or more discounts on your auto insurance. These discounts can sometimes result in substantial premium savings, so talk to your agent about any that might apply. Here are some ways to qualify for discounts:

  • Drive less: If you drive less than a certain number of miles a year (e.g., 12,000), you may be eligible for a low-mileage discount. There are many possible ways to cut your mileage to qualify for this discount, such as taking the train to work instead of driving.

  • Drive more safely: You may be entitled to a safe driver discount if you maintain a clean driving record for a certain amount of time (usually three years). This generally means no accidents, drunk driving convictions, serious moving violations, or other infractions during that time.

  • Add safety/antitheft devices: You may receive a discount if your car is equipped with safety features like antilock brakes, automatic seat belts, and airbags. Also, antitheft devices such as car alarms and tracking systems may get you a discount because they reduce the odds of theft and vandalism.

  • Check out rates by location: If you are moving or relocating, check out rate differences among your possible new residences. Sometimes a short distance can mean a big difference in rates.

  • Keep your car in a garage: Housing your car in a garage may give you a slight break on your premium. That's because cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles.

  • Get a multipolicy/multifamily discount: You may receive a discount from your insurance company if you buy more than one type of insurance from that same company (e.g., auto and homeowners). A discount may also apply if you insure multiple cars under the same policy or with the same company.

  • Ask about other discounts: Other discounts may be available if you don't smoke, participate in a car pool, stay with the same company for a number of years, are over 50 years of age, have a covered child who attends school at least 100 miles away, or meet other conditions.

Drop certain coverages

The collision and other-than-collision portions of your policy cover damage to your own vehicle from accidents and a variety of other causes. This coverage is optional in virtually every state, so does it make sense to have it? In most cases, yes. However, if you drive an older car that's worth less than $1,000, it may be cost effective to drop this type of coverage. Why? Even if the car were stolen or totaled, the amount of money you'd get from your insurance company would be relatively small. In some cases, the amount you'd receive would be even less than your out-of-pocket costs for this type of coverage (the extra premium and the deductible). Another thought is to drop any optional endorsements you may have--weigh the cost of these items against their importance to you.

Lower coverage limits

Another way to reduce your premium is to lower the dollar amounts of certain coverages (though state minimums may apply). But be very careful. Having less than adequate amounts of insurance can be risky, especially in the area of liability coverage. You should keep your liability coverage as high as possible, because this is where you can have the greatest losses. For example, if you injure people in an accident, claims against you for medical bills and other expenses can be substantial. You might consider less coverage in other areas, but don't rush into these decisions just to save money--discuss them with your insurance agent or broker first.

Disclosure

Investment Advisory and Financial Planning Services offered through SWMG, LLC, a Registered Investment Adviser. 

Winterizing Your Home

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The leaves have fallen, the days are getting shorter, and the weather's getting colder. Soon the snow will fly, and you're looking forward to snuggling on the couch with a good book in front of a warm fire. But before you get too comfortable, make sure that your house is ready for the winter.

The protective blanket of your homeowners insurance

Your homeowners insurance policy can save you from severe financial loss if your home is damaged or destroyed. It can also provide you with compensation for liability claims and medical expenses that result from property damage and personal injuries suffered by others on your property. Your policy can protect you from the following winter scenarios:

  • A tree limb is blown down in a blizzard and shatters your picture window.

  • A package delivery person injures his wrist when he falls on the slippery sidewalk you hadn't shoveled and sanded.

  • A cold snap freezes the water in the pipes in your basement laundry room, making them burst.

  • While you're away, your neighbor comes over to feed your cats. As she enters the house, the accumulated ice over the entryway falls on her head, giving her a concussion.

  • Leaves clogging your chimney catch fire, and the smoke damage stains the wallpaper in the upstairs hallway.

Adequate homeowners insurance would compensate you for these damages to your property and protect you from liability claims resulting from these injuries to others.

If you need more blankets

Your level of liability coverage under your homeowners insurance policy should be sufficient to protect all of your assets. If the standard amount offered under your policy is insufficient for your needs, there's a couple of things you can do.

In most cases, you can increase your existing insurance policy's liability limits. If doing so does not provide adequate coverage, you can buy a personal liability umbrella policy. Once the limit on your homeowners (or automobile) policy is reached, the umbrella policy takes effect, supplementing the liability coverage offered under your homeowners (or automobile) policy.

Things you can do to help yourself

Here are some things you can do to minimize the chance that your home will be damaged or someone will be hurt on your property during the winter. Although some of these tips are storm related, many of them should be done before winter hits.

  • To ensure sufficient heat and minimize the risk of fire, make sure that your furnace is clean and works properly. Also, make sure that the pipe bringing fuel to the furnace doesn't leak.

  • Ice and snow can weigh down trees or limbs; if the boughs break, they could damage your home or vehicle, or injure someone. Trim them before the storm season starts.

  • To prevent water from building up and freezing in your gutters, clean dead leaves and other debris from them. While you're up there, clean out the chimney and install a screen over it to prevent future clogging.

  • Repair cracked or peeling caulking to reduce the possibility of water seepage freezing in the door or window frames. Doing so will also keep out the cold air, reducing your heating bills.

  • Keep snow and ice from building up around any exterior doors. If you do, the doors will close completely (saving heat) and won't rot or warp from water damage.

  • Insulate exposed pipes near exterior walls.

  • Promptly shovel your sidewalks and driveways after a storm. Salt or sand them to help prevent falls.

  • Keep sidewalks and driveways well lit so people can see where they're walking.

  • Keep stairs, outdoor steps, bannisters, and handrails in good repair.

  • Clear excessive snow or ice from your deck to prevent its collapse.

  • Attach heating strips to the edge of your roof to help prevent ice and snow buildup. If possible, clear your roof of excessive ice or snow to prevent both water damage and injury from falling accumulations.

Once you've winterized your home, you can feel more at ease when you settle down with that book on the couch before the fire.

Disclosure

Investment Advisory and Financial Planning Services offered through SWMG, LLC, a Registered Investment Adviser. 

Handling Market Volatility

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Conventional wisdom says that what goes up, must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when it's your money at stake.

Though there's no foolproof way to handle the ups and downs of the stock market, the following common sense tips can help.

Don't put your eggs all in one basket

Diversifying your investment portfolio is one of the key ways you can handle market volatility. Because asset classes often perform differently under different market conditions, spreading your assets across a variety of different investments such as stocks, bonds, and cash alternatives (e.g., money market funds and other short-term instruments), has the potential to help manage your overall risk. Ideally, a decline in one type of asset will be balanced out by a gain in another, though diversification can't guarantee a profit or eliminate the possibility of market loss.

One way to diversify your portfolio is through asset allocation. Asset allocation involves identifying the asset classes that are appropriate for you and allocating a certain percentage of your investment dollars to each class (e.g., 70 percent to stocks, 20 percent to bonds, 10 percent to cash alternatives). A worksheet or an interactive tool can suggest a model or sample allocation based on your investment objectives, risk tolerance level, and investment time horizon, but your strategy should be tailored to your unique circumstances.

Focus on the forest, not on the trees

As the markets go up and down, it's easy to become too focused on day-to-day returns. Instead, keep your eyes on your long-term investing goals and your overall portfolio. Although only you can decide how much investment risk you can handle, if you still have years to invest, don't overestimate the effect of short-term price fluctuations on your portfolio.

Look before you leap

When the market goes down and investment losses pile up, you may be tempted to pull out of the stock market altogether and look for less volatile investments. The small returns that typically accompany low-risk investments may seem downright attractive when more risky investments are posting negative returns.

But before you leap into a different investment strategy, make sure you're doing it for the right reasons. How you choose to invest your money should be consistent with your goals and time horizon.

For instance, putting a larger percentage of your investment dollars into vehicles that offer safety of principal and liquidity (the opportunity to easily access your funds) may be the right strategy for you if your investment goals are short-term or if a long-term goal such as retirement has now become an immediate goal. But if you still have years to invest, keep in mind that although past performance is no guarantee of future results, stocks have historically outperformed stable value investments over time. If you move most or all of your investment dollars into conservative investments, you've not only locked in any losses you might have, but you've also sacrificed the potential for higher returns.

Look for the silver lining

A down market, like every cloud, has a silver lining. The silver lining of a down market is the opportunity you have to buy shares of stock at lower prices.

One of the ways you can do this is by using dollar cost averaging. With dollar cost averaging, you don't try to "time the market" by buying shares at the moment when the price is lowest. In fact, you don't worry about price at all. Instead, you invest the same amount of money at regular intervals over time. When the price is higher, your investment dollars buy fewer shares of stock, but when the price is lower, the same dollar amount will buy you more shares. Although dollar cost averaging can't guarantee you a profit or protect against a loss, over time a regular fixed dollar investment may result in an average price per share that's lower than the average market price, assuming you invest through all types of markets. A workplace savings plan, such as a 401(k) plan in which the same amount is deducted from each paycheck and invested through the plan, is one of the most well-known examples of dollar cost averaging in action. Please remember that since dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to make ongoing purchases.

Don't count your chickens before they hatch

As the market recovers from a down cycle, elation quickly sets in. If the upswing lasts long enough, it's easy to believe that investing in the stock market is a sure thing. But, of course, it never is. As many investors have learned the hard way, becoming overly optimistic about investing during the good times can be as detrimental as worrying too much during the bad times. The right approach during all kinds of markets is to be realistic. Have a plan, stick with it, and strike a comfortable balance between risk and return.

Don't stick your head in the sand

While focusing too much on short-term gains or losses is unwise, so is ignoring your investments. You should check up on your portfolio at least once a year, more frequently if the market is particularly volatile or when there have been significant changes in your life. You may need to rebalance your portfolio to bring it back in line with your investment goals and risk tolerance, or redesign it so that it better suits your current needs. Don't hesitate to get expert help if you need it when deciding which investment options are right for you.

Disclosures

Investment Advisory and Financial Planning Services offered through SWMG, LLC, a Registered Investment Adviser. 

Financial Independence: Helping you See the Big Picture

Financial Independence: Helping you See the Big Picture

Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.

That's where financial planning comes in. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.

Getting Help from a Financial Professional

Getting Help from a Financial Professional

Are you suddenly on your own or forced to assume greater responsibility for your financial future? Unsure about whether you're on the right track with your savings and investments? Finding yourself with new responsibilities, such as the care of a child or an aging parent? Facing other life events, such as marriage, divorce, the sale of a family business, or a career change?

Members of the Military: Personal Financial Planning

Members of the Military: Personal Financial Planning

Financial planning is the process that can help you pursue your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources. Just as the success of a military mission is dependent upon proper planning, your financial success may be dependent upon creating a sound financial plan as well.

Sudden Wealth

Sudden Wealth

What would you do with an extra $10,000? Maybe you'd pay off some debt, get rid of some college loans, or take a much-needed vacation. What if you suddenly had an extra million or 10 million or more? Now that you've come into a windfall, you have some issues to deal with. You'll need to evaluate your new financial position and consider how your sudden wealth will