Worried About Layoffs?
We haven’t been getting very good news about employment in the US lately. And of course, all economic news, with the bailout of the mortgage giants, is pretty grim. In fact, home foreclosures hit a record in the 3rd quarter of this year. And if you think that the bailout will help the situation, you might want to read this article: who does the mortgage giant bailout help?
Prepare for an Income Loss
Do home mortgage defaults and layoffs have anything to do with each other? Well, according to the much maligned Freddie Mac, unemployment or income loss is the leading cause of mortgage default. In an ideal world, we would all have 6 months of income stashed in a bank account in case of an income loss. But lately, with rising gas and food prices, most of us have had to dig into that savings account.
So what can you do? Well many people can qualify for a supplemental job loss protection program. Instead of a loan company financed mortgage protection plan, which only pays the mortgage company, you can get a plan that actually pays you cash if you are layed off. I think that giving the consumer the choice of how to allocate the cash, rather than the loan company, is a better deal to protect a family’s home, credit, and finances.
Learn more about Job Loss Payment Protection Here.
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Consumerism: When Less Is More with Anti Consumerism
Why Anti-Consumerism? Isn’t that Anti-American?
I grew up in a very frugal home. My parents paid cash for used cars, and we lived in older homes with small mortgages that were well within their means. My folks always had money for important things like health insurance, glasses, or emergency travel. They had what we used to call a depression mentality, and as a young person, I struggled against it. Of course, I wanted a better bike, a fancier bedroom set, and more clothes that had not come from my older sister.
So as a young adult, I saved some, but mostly felt as if some extra cash in my hand was a prime reason for purchasing new electronics, hip mall clothes, and whatever else I just had to have. And of course, I took out loans for brand new cars on the lot, and those cars seldom were paid off before being traded in.
I found this article on a term called Off-Consumerism, and it fits in with my new mentality. I like the shoe comparison, because well, we all need shoes. Maybe we even need a few different types of shoes. For instance, I still believe a reasonable person might need a pair of gym shoes, some dress up shoes, and a pair of sandals. It might even be reasonable to consider having a pair of beach shoes, or flip flops, and another pair of comfortable every day shoes. That’s five pairs of shoes.
The Shoes
So it can be reasonable to have five pairs of shoes, even as a frugal person, but can anybody justify having twenty-five pairs of shoes. In my mind, anything over 5 pairs of shoes means we need to clean the closet. Maybe shoes could be donated to an organizagtion that provides shoes to people who do not have any shoes. Maybe our own lives can be simplified by having to contain less clutter. Maybe the black pumps can be polished, and really, do not need to be replaced.
Also consider the cost of shoes. Now some people have foot problems, and their health and comfort justifies a really expensive pair of orthopedic shoes. In my mind, that is something they should have. But most of us can perform just fine in $35 pumps from a discount store, and we really do not need $135 pumps from a name brand retailer. Most of us are happy wearing $7 flip flops to the pool, and $27 flip flops do not enhance our experience.
So take those 5 pairs of shoes. If they are purchased at an average cost of $75 each, that is $375. If you provide shoes for a family of 4, that is $1500! If you are providing shoes for kids, they need to be replaced, sometimes a couple of times a year! So let’s say you are spending 2 grand on shoes because you buy the “best”. And by “BEST”, I mean you equate expense with quality, and the accumulation of goods with comfort.
But if you purchased those same shoes at an average cost of $30 each, you would have spent $150, or $600 for your family of 4. You have saved $900! Is there some other use you could put that money too? A savings account, health insurance, and a small donation to help people with no shoes comes to mind!
Blue Jeans or Butter?
Now, when I say shoes, I mean everything. A teenage boy’s blue jeans, off the rack, at the local discount store are about $12 each. The same jeans, from the name brand mall store, are $40 on a good day. And yes, I am cheating by using boys for an example, because girls are a tougher issue on blue jeans. I have found that clothing companies do not make girls as easy to fit as boys. The topic of another post…. But let’s attack the boy’s jeans first because it is an easier problem. So 5 pairs of jeans for a 16 year old boy can cost $60 plus tax. That same $60 will not even buy 2 pairs of jeans at the mall store, unless you hit a great sale!
So the deal I struck with my teenage boys was to accept 5 pairs of $12 jeans, and they could have half of the $140 savings to spend as they liked. The caveat there was that some portion had to be given up for charity, and that they needed to find their old, outgrown shoes for a donation at a local clothes drop. So we had a bag of 5 pairs of decent, but outgrown shoes for a clothes drop, and the boys each donated $10 for a local charity fund. They each had $60 to spend. The collaborated, and allocated the money for a couple of video games, a couple of bags of munchies, and still had $30 to stick in their drawers for their ready cash stash.
So I hope I am helping my own kids get in the habit of finding the lowest price item that will fill their needs, and by doing that understanding that some money can be left over for a reward. I also am trying to get them in the habit of giving. Charity should just be part of the process of spending.
Now, again, I am cheating here by not even reporting that this whole process seems to be tougher with my teenage daughter. She is under more pressure at school to wear name brands. And it seems harder to fit her with off the rack discount store jeans. So she took her $200 budget and found 3 pairs of name brand jeans on sale for $27.00, and accepted 2 pairs of crop pants on sale for $21.00 each. She spent $125, and had $75 left over. I gave her the same deal, so she had $37.50 left over. She still found a couple of pairs of outgrown jeans for the donation box, gave $10 to charity, and had a bit of cash left over. I felt a bit sorry for her because I understood that her clothes just seem to cost more, so I slipped her another $20. Unfair? Well maybe, but sometimes the needs of the one seem to outweight the needs of the many!
So think about off consumerisms, because the money you save on shoes could really help out on a rainy day. And some of it could, you know, be used to provide shoes (or whatever) for people who have no shoes.
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Really Cheap Life Insurance Rates
Do You Know About No Load Life Insurance?
We certainly see a lot of ads for cheap life insurance, but you seldom see an ad for no load life insurance. This is because this life insurance is sold without adding the commission fees into the premium, and so it is much cheaper. Do not assume you get the lowest, no load rates, even if you purchase a policy direct from an insurance company either because they still have to recoup their advertising. Insurance companies spend a lot in TV ads, direct mailers, and magazine spreads.
The absolute cheapest policy would probably be no load term life insurance. These are usually purchased from a financial advisor who earns his money by charging a fee for consulting, or who is a salaried employee of an insurance or financial company. Permanant life insurance like whole life or universal life insurance costs more because it builds a cash value, but with a no load policy, the cash value can begin accumulating right away. A cash value does not usually begin until the commission expense has been recouped by the insurance company.
If you are looking for more traditional, affordable life insurance why not take a couple of minutes to look at the best term life insurance quotes.
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Cheap Health Insurance — Oxymoron?
Can You Pinch Pennies On Health Insurance?
Well, if you live in the US, and need to obtain an individual health insurance policy, it make seem impossible to find cheep health insurance. In fact, this website calls it cheep health insurance! But we actually have some very valid tips. First, look at the deductible. Raising the deductible is one of the surest ways to reduce the premium. The difference between a $1k yearly deductible and a $5k deductible can be hundreds of dollars a year. An HSA account, which allows you to earn interest in a savings account that can be used to meet the deductble and copays, and which also has tax advantages, can be a great step towards frugal health insurance!
Learn more about how to find the best individual health insurance for you and your family. If you are confused about the different types of health insurance, look at a comparison between HSA and PPO and HMO Medical Plans.
If you run a small business, you may need to decide how you are going to obtain medical coverage for yourself, your family, and your employees. Look at Small Business Health Insurance for a comparison between group vs. individual for small companies.
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