Category Archives for Blogging
Non-Recourse Premium Financing
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Did you know that if you’re old and wealthy, you can get additional life insurance coverage for free or at fairly low cost? Termed as non-recourse premium financing, this is currently one of the most popular products in the life insurance marketplace.
Non-recourse premium financing has become a popular concept with high net worth individuals who need the extra life coverage for estate planning. How it works is that premium financing firms extend a loan to older, affluent people to go out in the market and buy a large insurance on their life.
The life insurance policy bought by the borrower is the full and only collateral in this type of lending.
The loan is for a term of two to two-and-a-half years during which the borrower makes no payments on it. If the borrower passes on during the loan period, then his estate needs to repay the loan along with the fees and accrued interest. What’s left of the estate is transferred to the borrower’s legal beneficiaries or heirs.
However, if the borrower survives the term of the policy, he can take recourse to any one of the following:
- Transfer the policy to the lender.
- Sell the policy in the aftermarket and use the earnings thereof to repay the loan.
- Retain the policy and pay off the loan along with the fees and accumulated interest.
Non-recourse premium financing is available to all U.S. citizens who are over 70 years of age and are bona fide accredited investors. The policy has to be purchased from a U.S. based insurance company and must have a face amount between $1,000,000 and $10,000,000. The loan amount extended to the borrower cannot be less than $100,000.
So, how does the borrower benefit from taking a loan to buy additional life insurance? Well, the biggest advantage of non-recourse premium financing is that it allows the borrower to buy a large insurance policy without having to make any expense out of his pocket. Traditionally, such as exercise would have meant that he uses either his savings or liquidates part of his estate to cover the cost of additional life insurance.
But just like anything else, this concept has as many critics as it has takers. The biggest criticism hurled at non-recourse premium financing is from purists who argue it dilutes the very purpose of life insurance by allowing third parties to treat it as an investment vehicle.
According to them, the reason for buying life insurance is to protect the financial stability of your family if and when you are no longer around to take care of them and it should not be left open to investor speculation.
Another major criticism of this type of financing is that a total stranger may stand to gain huge benefits from the policy holder’s death. This is especially true if the insured borrower decided to transfer the policy to the lender or sell it in the secondary market, which would mean that a third party totally unrelated to him would own the policy and collect all the death benefits when he dies.
Even insurance carriers are up in arms against this kind of transaction between financing companies and policy holders. They fear that if non-recourse premium financing is allowed to flourish, it would lead to an increase in the cost of life insurance making the premiums unaffordable for ordinary citizens.
Life insurance companies’ work on the premise that a significant number of policies lapse before the insured dies, which means their payouts are lesser making it possible for them to offer low premiums to policy holders. However, if investors were to buy a policy, it’s likely they will continue paying premiums until the insured dies so they can collect the benefits.
An increase in the number of payouts by insurance companies will impact their profitability and lead to higher premium rates.
The jury may still be out on the moral and financial implications of non-recourse premium financing, but a California federal judge giving it his approval in a case last year may calm some of the dissenting voices.
How about you all? Has any one had experience using this type of policy? Share your experiences by commenting below!
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**Photo courtesy of http://www.insureyourchildsfuture.com/
Weekly Roundup – Week of August 23th
My Personal Finance Journey Homepage
- Preparing Your Taxes Online vs. Hiring a Professional was included in the Tax Carnival @ Don’t Mess With Taxes
- What Percentage of My Salary Should I Save For Retirement? was included in the Carnival of Financial Planning @ My Trader’s Journal
- How I Adjusted My Monthly Budgeting to Account For Home Ownership was included in the Carnival of Personal Finance @ Provident Planning
- Should I Purchase Life Insurance Even Though I Don’t Need It? was included in the Carnival of Money Stores @ Intelligent Speculator
- Homeowner’s Insurance was included in the Carnival of Real Estate Investing @ The Income Blog.
- “High-End” and “Value” Pricing Strategies on Consumer Goods was included in the Festival of Frugality @ Frugal for Life.
- Buy-Sell Agreements was included in the Cavalcade of Risk @ The Not WithStanding Blog
- Creating A Will and Testament and Interesting Bequests From The Past was included in the Carnival of Financial Planning @ The Intelligent Speculator.
- How Should I Write a Will @ Out of Debt Again
- 100 Twitter Feeds for Fabulously Frugal Living @ Online Accounting Degrees by guest post Omar Adams.
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
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All-Star Reader Showcase: A Great Example of How To Use My Personal Finance Journey
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How about you all? How do you use the site?
If you ever see a good article on my blog that helps you to make a decision or steers you in the right direction, please let me know. I love hearing from readers.
Also, don’t forget to give me some feedback (using the feedback form) about how I can tweak the site to better meet your needs.
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Weekly Roundup – Enjoying The Virginia Outdoors Edition – Week of August 16th
My Personal Finance Journey Homepage
- Vanguard vs. Fidelity – Which Funds Are Better? was included in the Carnival of Personal Finance @ Live Real Now.net
- Should I Enroll in a Biweekly Mortgage Payment Plan? was included in the Carnival of Real Estate Investing @ The Income Blog.com
- Financial Action Steps To Take When Leaving An Employer was included in the Festival of Frugality @ Simply Forties.
- Does Phil Town’s 15 Minute Per Week Stock Investing System Work? was included in Stock Carnival Ecstasy @ FastSwings.
- How To Maximize Your Profits With Dropshipping was included in the Carnival of Financial Independence @ Ditch The Boss
- What Percentage of My Salary Should I Save For Retirement? was included in the Carnival of Financial Planning @ My Trader’s Journal
- Morningstar Admits Fund Expenses More Important Than Their Own Star Ratings When Analyzing Performance @ My Money Blog
- Funny Stock Symbols @ My Journey To Millions
- What I Learned From My Caffeine Free Month @ Squirrelers
- Change of Address.org – The ABC’s of Home Ownership
How about you all? Did you come across any good personal finance articles this week that I should know about? Let me know by commenting below!
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
The Real Cost of Owning A Pet
Previously on this blog, we have reviewed several topics relating to the joins and pains of pet ownership. We have reviewed the decision points around if you need to purchase pet insurance, helping out with dog fostering as a low cost alternative to pet ownership, and looked at the costs of different pet products.
Continuing on the topic of pet ownership is today’s guest posting from Alban. Alban is a personal finance writer at Home Loan Finder, where he helps people to compare home loans online. Enjoy!
The Real Cost of Owning a Pet
Whether you couldn’t picture your life without a pet, or your kids are pestering you for a pet and you’re wondering what all the fuss is about, you need to be sure you are aware of the true cost of owning a pet before you take on what can be a significant financial responsibility.
Typical Costs of Pet Ownership
The first year of pet ownership can be one of the most expensive as there can be a lot of accessories to buy and changes to be made to your home, and following are some typical yearly costs you should budget for when considering pet ownership – of course pets, just like us, can cost more in medical expenses for example as they get older.
As you budget for your new pet, don’t forget costs such as:
- The purchase. You may be lucky enough to be given a pet or pick one up from a shelter but for more unusual or specific pets you will have to buy them.
- Registration. Dogs and cats in particular must be registered with your local council, often from they are 12 months old, and the registration must be renewed each year.
- De-sexing. De-sexing your pets can get more expensive as they get older so it is best to organize this as soon as possible for their comfort, their health and the safety of other pets and animals in your area.
- Micro chipping. This is a security and safety measure you can follow for your peace of mind and is a one off cost to implant a microchip into your pet. If you pet is found, a vet can check for a microchip, which holds all of your contact information.
- A home or bedding. Depending on the type of pet you choose you’ll need either a cage, a kennel or some sort of bedding to give your pet a place to call their own. You may also need to furnish your pet’s home with toys and accessories.
- Vet bills. When you first buy a young pet, there will likely be a course of vaccinations required. You will then need to revisit the vet once a year for your pet’s regular shots. Vet bills may also include emergency costs if your pet is sick or injured.
- Food. Make sure you know about any special dietary requirements of your pet and budget for enough food for a growing young pet, and an increased cost as your pet is fully grown and even hungrier.
- Costs of medicines. Your pet may have special medical requirements or dietary requirements which need to be met, and you will also have to budget for the costs of regular worming and flea treatments for a furry pet.
- Pet boarding. If you and your family go on holiday and you can’t take your pet, you will need to pay for boarding or a house sitter to look after your pet.
- Pet insurance. To help you with all of these pet costs you can take out pet insurance which can pay a portion of each vet visit, cover emergency costs and even pay for some pet boarding each year.
- Your choice of home. it can often be harder to find a home if you have a pet, especially as very few rental properties will allow you to have a pet. Even if you own your own home, if you have a big outdoor pet, you need a big outdoor space.
The Costs for Different Types of Pets
The costs of pet ownership will differ vastly depending on your choice of pet, for example:
- To own some types of cats and reptiles you may need to buy an exotic pet license. However, check the rules relating to your area, as they differ from state to state.
- You may need to modify your yard to include a cat run to protect local wildlife, or upgrade fencing if you buy a large dog.
- If you choose a fish or other scaly pet, you may see increased power costs as you need to heat their tank or habitat.
- Your home maintenance needs can change if you own a pet and you may need to have your carpets cleaned more regularly to remove muddy paw prints, or pay for repairs to furniture or windows done by claws.
- Training is an important cost if you choose a dog as training your pup from a young age will ensure good behaviour for life, and avoid social issues down the track.
- Transporting your pet can mean the need for more accessories such as a cat cage or a dog harness.
How to Minimize the Costs of Pet Ownership
While there can be significant initial and ongoing costs associated with pet ownership, you can plan for them. For example, now that you know the costs you can expect, calculate the cost of pet ownership for your choice of pet and put aside those costs for a year to save up. If you find you have the room in your budget, you then have a head start on some of the purchase and set up costs.
Also, consider the savings and the value of having a pet. A dog for example can save you on gym fees if you take him for regular walks, and save you on after school activities if your children take the dog to the park or the beach. Owning and caring for any sort of pet will teach your children responsibility and accountability more comprehensively than earning any Scouts badge could.
To save on some of the costs of pet ownership:
- Don’t buy the pet. Before you head to the pet shop, check out your local animal shelters, they often have a range of pets too, not just cats and dogs. Pets from an animal shelter often have all of their shots up to date and are already de-sexed and you can buy the animals much cheaper and they are sometimes free. Plus, the animals in a pet shop will be bought eventually, those in an animal shelter may not.
- Research the type of pet you choose. Knowing about their diet and common health problems can help you care for your pet correctly from the beginning and avoid some expensive health problems in the future.
- Know the animal’s lifespan. The cost of a pet is ongoing but different animals can keep costing you for longer than others. For example a guinea pig will live an average of four years but a cat can live up to 20 years. A parrot can live on average 50 years and in some cases up to 80 years so be prepared.
Share your experiences by commenting below!
If you ever want to contribute to My Personal Finance Journey through a guest post, simply email me with your proposed topic, and we can work from there!
Rejuvenate Your Investment Strategy for Retirement Using Currency Exchange
Today’s guest post comes to us from Mike Trinkle. Mike is a currency trading author, who is sharing with us today a foreign currency exchange strategy that works well for him.
Are you looking for ways to change your investment retirement strategy due to poor performance? Or lower than expected returns? Admittedly, the recession has caused the majority of new and experienced investors to look for new avenues in to which to relocate their funds.
Currency exchange will recondition your overall investment basket and allow you to claim your short-term returns. However, you should also note that the forex market is much more volatile then the stock, bond, and commodity markets.
If you have been looking for short-term profits then the forex market is very easy to access; it’s open 24 hours a day / 5 days a week (markets are closed on the weekend).
Applying your current retirement investment strategy to the forex market may work with a few tweaks and knowledge base expansion. In order to have a successful forex strategy and increase your short-term returns you will need these three components; fundamental analysis, technical analysis, and strong discipline.
Fundamental Analysis
To have a lucrative fundamental analysis, you would be required to look for important news that would affect the overall currency market. The forex news consists of important news (macro-economic level) and the not so-much important news (micro and small ineffective economic news). Since, the global recession started in late 2008, there are three required economic news that need to be part of your fundamental analysis; unemployment rate, NFP (Non-farm payroll), and the Federal fund rate.
If you are trading the Euro (which is made of 27 European members) against the U.S Dollar and a positive or negative sentiment macro-economic news is announced; it will surely shake up your EUR/USD currency trade. Let’s take a look at the U.S unemployment rate and the NFP number that was just recently announced as an example to illustrate the reaction of breaking news. The forecast was that the unemployment is going to increase from 9.5% to 9.6% (negative for the U.S dollar) and that the NFP is going to decrease to -63K from -131K (positive to the U.S dollar). Looking back at all major currencies (Euro, GBP, and Yen) you would have noticed that the U.S dollar plummeted on that day … reason? The unemployment rate actual number was neutral/positive because it stayed at the same rate of 9.5% percent but the NFP number increased to an astounding -131K which was more then double then the original forecast.
Technical Analysis
Technical analysis is needed in currency trading more than in the stock, bond, or commodity markets to be prosperous.
In the forex market, the technical analysis of any currency will consist of two vital components; trend and resistance lines.
Trend is simply the flow of the currency is moving at; for example, currency moving in an downtrend direction (moves from the top-left corner to the bottom right corner) and vice-versa an uptrend direction (moves from the bottom-left corner to the top right corner). Why are trends relevant in the forex market? It’s because the daily trends are long-term lasting and it’s where majority of traders (commercial and professionals) are placing their buy or sell positions.
Resistance lines are previous points where the traders decided to start a new buying position or the buyers decided to sell. Resistance lines are important in the currency exchange market because that’s what the majority are watching as an entry or exit point. If a resistance line is broken on the upside, then you would know that your buy position is strong and if the vice-versa occurs where your buy position breaks a resistance line on the downside; you will need to exit and take the loss.
Discipline
The majority of the forex traders fail in the forex market because they have little to no discipline while trading. Many trade the forex market as a form of gambling or luck which is the wrong stance to have. You are not required to trade everyday but only during the times where you view the probability to win is greater then to lose. There will be times, where you will lose but being able to control your risk and having the proper money management plan; will give you a greater probability of short-term profits. Forex trading should be part of your retirement strategy and short-term gains will add up very fast but remember in order to be successful you must control your risk.
Here is a great quote from General George S. Patton about risk taking, “Take calculated risks. That is quite different from being rash.”
Thanks for reading!
Mike
How about you all? Have you all ever tried currency trading? Was it successful for you? Was it too risky?
Note from blog author: After analyzing the different aspects about foreign currency trading through reading this article, I’ve determined that while it is a worthwhile endeavor for some people, currency trading with currencies such as the US Dollar, Yen, or Bitcoin does not fit well in my investment strategy.
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Weekly Roundup – Moved In to The New Condo Edition – Week of August 2nd
Whew!!!! It has truly been a whirlwind of a week.
On August 2nd, I moved out of my apartment in the Northeast, passed down through the Mason-Dixon line, and have settled in to my new condominium that I purchased in Virginia. It’s definitely good to be back!
This week has been quite hectic for creating posts myself, but it has been convenient because it shut me up long enough to publish some great guest posts! Take a look at them when you get a chance!
One that truly shocked me was the comparison that Jordan did about the cost of living in California. Apparently, a $100K salary in California only covers the bare essentials! Ridiculous!
We also had a lot of luck this week with getting our articles featured at different blog carnivals around the blogosphere.
Listed below are the various articles that got selected for the competitions.
- Does Being Green Make Economic Sense – Part 2 – Recycled Paper and Rechargeable Batteries was included in the Best of Money Carnival at Budgets are Sexy
- A Credit Card Debt Saga – And How I Survived was included in the Carnival of Personal Finance at UltimateMoneyBlog.
- The all-important My Personal Finance Journey Account Hierarchy was included in the Carnival of Financial Planning at The Financial Blogger.
- eBay vs. Amazon – Part 1 – Comparison of Selling was included in the Carnival of Financial Independence at Ditch The Boss
- What Would You Do If You Had Credit Card Debt? was included in the Carnival of Debt Reduction
- How I Saved Myself Money with Rental Cars (and You Can Too!) was included in the Carnival of Money Stories at MoneyBeagle.
- Tax Benefits of Home Ownership was included in the Carnival of Real Estate Investing at TheIncomeBlog.
- Aldi vs. Wal-Mart vs. All the Rest was included in the Festival of Frugality at Yes I’m Cheap
- Are IPO’s a Good Investment Option was included in the Stock Carnival Ecstasy at FastSwings.
How about you all? What was your favorite post on the blogosphere this week? Any good ones that you have ran across in blog carnivals?
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Buy-Sell Agreements – What They Are And The Important Role of Life Insurance
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How about you all? Do you all have a small business/business and have a life insurance plan on your business partner? Have you ever participated in a buy-sell transaction?
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Related articles about businesses/insurance related matters at several of my favorite personal finance blogs:
Preparing Taxes – Doing it Online vs. Hiring a Professional
It’s an annual event, one you probably hate, regardless of how your tax rate varies by the country in which you live. Of course, you probably hate the exercise not because you have to pay out money to the government, but because you need to put a lot of information and records into order.
Preparing your taxes is a painful procedure – it takes up more than a few hours of your time. It requires an ordered thought process and a knowledge of tax laws and loopholes that you can legally exploit, and it is never easy to keep track of all your records and get them all sorted out and ready to process.
It is for these reasons that most people hesitate to do their own taxes, but then, they’re also wary of hiring an accountant to help them out. How do you decide which way is better when it comes to filing your returns – online or through a professional?
Hiring an accountant could cost you money, but that’s just about the only downside to this method. When you have help from a professional, all you have to do is provide them with all your records and account statements. They help you sort them out, provide you with legal advice, inform you about any kind of deduction you’re eligible for, and most important of all, get the work done in no time at all. Also, you’re eligible for a deduction on the fee you pay your accountant or professional tax preparer.
If you’re a busy professional, it’s best you hire someone whose regular job is to help people prepare their taxes. Even if your returns are simple, getting a professional to do them for you saves you both effort and time, both of which could be put to better and more effective use at your job or business. If your returns are complicated and you run a business or own depreciating and/or appreciating assets, it’s advisable to at least seek the advice of a professional even if you prefer to do your taxes on your own.
If your returns are relatively uncomplicated, you could do them online with some help from reliable sources. Various websites offer a comprehensive list of all the information and records you’ll need while others provide advice on how to go about the task. You save yourself a few hundred dollars, and you have the satisfaction of doing your taxes all by yourself.
Some people have their own accountants while others prefer to wing it year by year – if they have time on their hands and the inclination to do their own taxes, they file them online; if not, they look around for a qualified professional and get them to do the honors. Either way, it’s your choice based on your situation.
How about you all? Do you all do your taxes online, or do you obtain the help of a tax professional? Why did you choose the method you decided upon?
What online applications do you use to help file your taxes online?
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.
Weekly Roundup – Back to School Edition – Week of July 26th
My Personal Finance Journey Homepage
It was also a very active week for My Personal Finance Journey. Five of our articles were selected to participate in blog carnivals throughout the blogosphere.
Check out the posts that were selected, as well as the other very informative articles that were selected in the contests, by clicking on any one of the links below.
- Why Following Hot Mutual Fund Managers Doesn’t Work included in the Best of Money Carnival at Canajun Finances
- Home Based Business Opportunities included in the Carnival of Financial Independence at Ditch The Boss
- How I Decided Between HMO, PPO, and POS Health Insurance Coverage included in the Carnival of Money Stories at No Debt Plan.net
- Does Being Green Make Economic Sense – Part 1 – Green and Hybrid Cars included in the Carnival of Personal Finance at Beating Broke
- How Does Home Ownership Fit in to Your Overall Asset Allocation? included Real Estate Investing Carnival at The Income Blog
Additionally, listed below are several blog articles that caught my eye (and I commented on) throughout the week. Stop by their respective blogs and take a look!
- You Need an Emergency Fund by Moolanomy
- Afraid to Retire by BucksomeBoomer
- Tax Deductible Moving Expenses by Five Cent Nickel
- Alternatives to Blogger’s Default Comment System by WebUpd8
Keep on learning!
How about you all? Did any big events in your financial lives happen this week? Did you participate in any of these blog carnivals?
Are there any blog carnivals I am missing submitting articles to? Let me know!
Did you like this article? You can get the complete text of all the latest articles at My Personal Finance Journey in your email inbox each evening by clicking the link below and entering your email address. Your address will only be used for mailing you the articles, and each one will include a link so you can unsubscribe at any time.