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photo credit: Leonid Mamchenkov

For several months, I’ve been debating whether or not to get a Blackberry. While it would definitely be a great convenience, it isn’t a NEED. While I can justify the purchase price by using my ‘fun money’, I can’t justify the increased monthly bill. I currently pay $30.80/month and the Blackberry plan would increase that amount by ~$27/month. So what’s a girl to do?

My own self-imposed solution is that I can’t get the Blackberry until I figure out a way to increase my income by that $27/month or decrease my current expenditures. I could pretend that if I got the Blackberry, I would decrease my clothing or dining expense by $27 each and every month but I know that’s not true. Therefore, I assigned myself the task of finding a FIXED and MEASURABLE expense to decrease. I decided to attack one of the ‘heavy hitters’ aka car insurance.

Somehow I discovered (I think it was through another pf blog) that AAA offers car insurance. I had no idea. I submitted a quote through their website and an agent responded to me the next business day. The AAA premium is a whopping 28% less than what we currently pay and the coverage is comparable. That would cover the change to my monthly cell phone bill and then some. I haven’t pulled the trigger yet though, because I want to verify that AAA can provide our umbrella insurance as well. We currently use the same provider for auto and umbrella insurance and I’d like to keep it that way.

What tips and tricks do you use to get what you want while keeping your financial ship on course?

photo credit: Casey Serin

I’m considering getting rid of my car.  To give some background, we are a two person, three vehicle household.  We previously had two cars but purchased a pickup earlier in the year to use for home improvement projects.  (I blogged about it here – http://www.msmoneysavvy.com/2008/04/08/evaluating-the-wisdom-of-a-purchase/).

Before we had the truck, Mr. Savvy drove ‘his’ car to work and I drove ‘my’ car to work.  Once we had the truck and gas prices increased, he drove the truck to work and drove his car (a bit of a gaz guzzler) only on weekends.  Then the water pump on the truck went out (and he’s replacing it himself which has turned into a multi-week project) so he went back to driving his car.

However, I started a new position in August and we started carpooling every day in my car and he only drove his car on weekends again.  Then we experienced gas shortages in Atlanta.  Once Mr. Savvy’s tank was empty (and we couldn’t find any gas), his car stayed garaged for two weeks straight.  We drove my car everywhere and coordinated our weekend schedules for using the car (since the truck was out of commission).  Living with only one car wasn’t that bad and really highlighted to me that we no longer need three vehicles.  So I’ve proposed to Mr. Savvy that we get rid of my car.

His car is a four door sedan so I’d like to keep it around.  Also, I want to keep the truck for hauling stuff.  My car is the fun car so it can go.  While I love my car, why pay to register, maintain and insure it if we don’t need it?  Mr. Savvy isn’t sold on the idea yet but we discussed it over lunch today and he’s going to mull it over.  I don’t think he likes the idea of ’sharing’ a car but it’s not really a big deal to me.  Has anyone else ever decreased the number of vehicles in their household?  How did you come to that decision?

How often do you seriously and completely review your finances? I would suggest no less than once and year. You may discover ways to save money or ways that you’re just plain wasting money. After our state of the union, I will post the decisions/changes we make. I invite you to do the same.

photo credit: mari_isabel20

I had researched umbrella insurance last year but found that insurance companies believe that owning/operating a motorcycle is a great risk. Go figure – LOL. Therefore, in order to obtain umbrella insurance, I would have had to significantly increase the insurance coverage on my motorcycle (liability only) and my umbrella insurance premiums would have been quite high. Now that I’ve sold my motorcycle, I decided to call my insurance company once again.

But before I get into that, let me explain what an umbrella insurance policy does.  It provides liability coverage above and beyond the limits of your current insurance (i.e. homeowners/renters and auto).  As an example, let’s suppose you cause an auto accident and are held liable for $200K of damages.  If your auto policy limit is only $100K, then you are personally responsible for the remaining $100K.  Not fun, huh?  Being held liable can easily bankrupt people.  Even if you don’t go bankrupt, a large portion of your assets can be taken from you.  I definitely don’t want that.  Hence, the need for umbrella insurance.

Most umbrella coverage is a minimum of $1M so that’s what I requested when I called my insurance company last night.  However, as my assets grow, I will re-evaluate that amount.  I was asked a series of questions designed to assess whether or not I’m ‘high risk’.  Some of the factors that comprise high risk are owning boats/motorcycles/rental property.  That’s not to say you won’t be able to obtain coverage but your premiums will also be higher.  Certain professions are deemed high risk as well – anyone who holds public office or sits on a board of directors as well as journalists (sorry Frugalista!).  Also, held in consideration is whether or not you own any ‘dangerous’ pets such as Rottweilers or pitbulls.

After passing the battery of questions, the agent evaluated my auto coverage.  My policy limit was $100K/$300K but I was told I would need to increase that to $300K/$300K in order to obtain umbrella coverage.  I guess $300K is the magic number at which they feel comfortable providing coverage.  That change increased my auto policy by $84/year.  The umbrella policy is $252/year.  So the grand total for $1M of protection is $336/year or a mere $28/month.  To me, that’s a small price to pay for peace of mind.

photo credit: mmechtley

These five simple steps can potentially save you hundreds of dollars a year on car insurance.

1. Shop around – Don’t assume that the company you’ve always used will have the lowest rates. Non-traditional companies with a heavy online presence (think Geico or Progressive) often have much lower premiums.
2. Take a defensive driving course – Most companies offer a discount for drivers who have taken such a course. These courses can be found online for as little as $40 and your discount will typically last for three years.
3. Increase your deductible – If you already have an established e-fund, there’s no reason to keep your deductible at $250 or $500.  If you feel that you could absorb a $1000 deductible, then the cost savings may be worth it for you.
4. Consider liability only – If you have an older vehicle that may not be worth much, it may be worthwhile to consider dropping your comprehensive and collision coverage.  Instead, use that money to build up a “car fund” for when you do replace the vehicle.
5. Look for multiple policy discounts – In addition to a multi-vehicle discount, many companies offer multiple-policy discounts.  This means you can receive a discount for having your homeowners or renters insurance with the same company that holds your auto insurance.

So, by taking just a little time to evaluate your insurance needs, you can reduce the amount you pay for car insurance.

Yesterday, I discussed the first step to financial success. Click here for that post. Now that you’ve defined your financial mission, the second step of your journey is to establish goals. Your goals can be short-term (within five years) or long-term (five years or longer). The goals you set should be those that will allow you to achieve your financial mission. Writing down your goals will help you prioritize your spending when it comes time for you to chart your course. Generally speaking, your goals will fall into one of five categories.

1. Insurance planning -Insurance is necessary in order to reduce the risk of a catastrophic loss. This includes, but is not limited to, auto insurance, homeowner’s/renter’s insurance, health insurance, life insurance, disability insurance and long term care insurance.
2. Tax planning -The goal of tax planning is to minimize income tax liability as well as take advantage of available incentives such as tax credits, tax deductions and tax-deferred or tax-advantaged accounts.
3. Retirement planning – The goal of retirement planning is to accumulate sufficient capital to provide adequate income for your predicted life expectancy.
4. Investment planning – Investment planning is key in order to amass assets and resources in order to fund retirement, inheritances as well as other expenditures such as home purchase, college. etc.
5. Estate planning -Last, but not least, estate planning allows for your wishes to be realized as it applies to your heirs or other parties to whom you wish to transfer funds.

While these categories may seem different, your goals are all interdependent. Keep in mind that goals are high level statements. You will refine them and be more specific in the next step, which is defining objectives. Stay tuned for tomorrow’s post which will address that.