Michelle L. Williams
Independent Insurance Broker
MICHELLE LASHAY WILLIAMS and
THE WILLIAMS AGENCY!
How To Prepare For Emergencies
March 10, 2023
Saving for a rainy day is something that everyone should do. But it’s not always easy.
It can be tough to put money away when you’re struggling to make ends meet. However, an emergency fund can mean the difference between weathering a financial storm or being exposed to financial harm.
Fortunately, creating an emergency fund is simple. In fact, if you play your cards right, it can be up and running in moments!
You can leverage several different types of accounts to save for those unexpected road bumps. A good option is opening a savings account or money market account with your bank.
Why? Because they are easy accounts to use when emergencies arise. They grant quick access to your money, usually without the threat of tax or bank penalties for withdrawals.*
Plus, they’re often a breeze to create. Just apply online with your current bank or speak with a representative. You might be surprised how quickly you can get an account up and running.
Next, set up a recurring deposit of whatever amount you can spare into your emergency fund. That way, it won’t be too hard to maintain throughout the year. Every time you get paid or get money from somewhere else, just throw some in there! It’s that simple.
Your goal? Save up to 3-6 months of living expenses. Why 3-6 months? Because that’s often enough cushion to cover many unexpected expenses that can so easily derail you.
At the very least, it gives you breathing room if your income were to dry up for 3-6 months.
At the most, it can cover an unexpected broken foot and subsequent surgery without incurring medical debt.
Regardless of how you use it, saving for a rainy day is just good financial sense. If you’re able, start your emergency fund now to safeguard yourself in the future!
Why It's Important to Protect Your Family With Life Insurance?
March 1, 2023
If you have a family, you have many responsibilities.
You have a responsibility to help them celebrate promotions, birthdays, and holidays.
You have a responsibility to sit with them during their bad days, their break ups, their failures, their grief.
You have a responsibility to listen and understand, even if you have no clue what they’re trying to say.
You have a responsibility to own up when you mess up, and to forgive when they mess up.
And you wouldn’t trade those responsibilities for the world. In fact, they feel more like honors and privileges than burdens.
If you’re the breadwinner for your family, you have another responsibility and honor—to provide for them as best as you can.
It’s how you give them the big things, the little things, and everything in between.
But one tragic consequence of passing away is that you can no longer provide those things. You’re not there to help celebrate, to comfort, to listen, to forgive. In those ways, you’re truly irreplaceable.
That’s why many families choose life insurance. It’s an opportunity to provide for the ones they love.
The payout from life insurance, called a death benefit, gives their family cash that replaces the lost income. The family faces a long emotional journey of grief and healing. But they’re protected from a traumatic financial catastrophe.
In other words, life insurance gives you the power to fulfill one of your primary duties—provide for your family. And that’s one of the greatest gifts you can give.
Wealth Is Security, Not Paycheck Size
June 27, 2022
Wealth isn’t about how much you earn. It’s about how secure you feel.
Consider two examples that illustrate this truth…
Mark works for an up-and-coming software company in middling America.
He earns a handsome salary.
He wakes up at 5 a.m., works out, and meditates for 30 minutes. His chakras stay open. His creative juices stay flowing.
He shows his coworkers pictures of his Tesla between ping pong matches.
He’s never had any of them over to his rented downtown apartment. They mostly just eat sushi at that new place, hit the town, then go their separate ways.
His flat screen TV and triple monitor setup display more pixels than his eye can perceive.
In short, Mark is rich… but he isn’t wealthy.
He’s not wealthy because he has no security. If he gets laid off, he loses his Tesla, his community, his apartment, everything.
Let’s consider another example…
Sarah earns average money running a small creative studio in Nowhereville, U.S.A.
She‘s late to her weekly lunch dates with her long-time friends. Projects don’t finish themselves!
The kids rushed cleaning the dishes… again.
When her mom died, her friends worked around the clock to keep her family fed with homemade meals.
When the dust of her day settles, she sits down in her bed, does some light reading, journals things she’s grateful for, and then hits the hay.
What’s left after business and living business expenses goes to her Roth IRA that’s been steadily growing for two decades.
Sarah may not be rich… but she’s wealthy beyond belief.
If anything happens, she has assets—a family, a community, a business, and savings—to support her. She rests easy the moment her head hits the pillow.
The takeaway? Invest in your security. That could be a savings account, a healthy relationship, a community, life insurance, or a stable business. Over time, those investments can help bring you the peace of mind you’re searching for.
Tax Now or Tax Later?
June 8, 2022
If someone asked if you’d rather pay taxes now or later, what would you say?
Paying later is tempting. After all, who likes paying taxes at all? As with most inconveniences, it’s easy to delay, delay, delay.
But here’s an important question. When do you think taxes will be greater—today, or years from now?
It’s impossible to answer.
Looking to history doesn’t really help—income taxes are actually far lower now than they were in the 1930s, 40s, or 50s.¹ So if you pay now, you may miss out if taxes sink even further.
But no one can predict the future. If you opt to pay later, unforeseen circumstances may create a higher tax environment down the road.
So if you’re comparing tax now vs. tax later, it may feel like you might as well toss a coin to determine your strategy. Not a good place to be!
But fortunately, there’s an alternative. Tax never.
And no, that doesn’t mean buying shady nail salons, opening businesses in the Cayman Islands, or committing a felony. It simply means working with a licensed and qualified financial professional to identify time-proven—and 100% legal—financial vehicles.
Roth IRAs/Roth 401(k)s Health Savings Accounts Indexed Universal Life (IUL) Insurance 529 College Savings Plans Municipal Bonds
Each vehicle has specific rules, limitations, strengths, and weaknesses. It’s absolutely critical that you consult with a financial professional before you start leveraging these tools. Remember, you don’t need to flip a coin to make financial decisions!
¹ “History of Federal Income Tax Rates: 1913 – 2021,” Bradford Tax Institute, https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx
What's a Recession?
May 23, 2022
Most of us would probably be apprehensive about another recession.
The Great Recession and COVID-19 caused financial devastation for millions of people across the globe. But what exactly is a recession? How do we know if we’re in one? How could it affect you and your family? Here’s a quick rundown.
So what exactly is a recession? The quick answer is that a recession is a negative GDP growth rate for two back-to-back quarters or longer.¹ But reality can be a bit more complicated than that. There’s actually an organization that decides when the country is in a recession. The National Bureau of Economic Research (NBER) is composed of commissioners who dig through monthly data and officially declare when a downturn begins.
There’s also a difference between a recession and a depression. A recession typically lasts between 6 to 16 months (the Great Recession was an exception and pushed 18 months). The Great Depression, by contrast, lasted a solid decade and witnessed unemployment rates above 25%.² Fortunately, depressions are rare: there’s only been one since 1854, while there have been 33 recessions during the same time.³
What happens during a recession. The NBER monitors five recession indicators. The first and most important is inflation-adjusted GDP. A consistent quarterly decline in GDP growth is a good sign that a recession has started or is on the horizon. Then this gets supplemented by other numbers. A falling monthly GDP, declining real income, increasing unemployment, weak manufacturing and retail sales all point to a recession.
How could a recession affect you? The bottom line is that a weak economy affects everyone. Business slows down and layoffs can occur. People who keep their jobs may get spooked by seeing coworkers and friends lose their jobs, and then they may start cutting back on spending. This can start a vicious cycle which can lead to lower profits for businesses and possibly more layoffs. The government may increase spending and lower interest rates in order to help stop the cycle and stabilize the economy.
In the short term, that means it might be harder to find a job if you’re unemployed or just out of school and that your cost of living skyrockets. But it can also affect your major investments; the value of your home or your retirement savings could all face major setbacks.
Recessions can be distressing. They’re hard to see coming and they can potentially impact your financial future. That’s why it’s so important to start preparing for any downturns today. Schedule a call with a financial professional to discuss strategies to help protect your future!
¹ “What Is a Recession?” Kimberly Amadeo, The Balance, Apr 6, 2022, https://www.thebalance.com/what-is-a-recession-3306019
² “What Is a Recession?” Amadeo, The Balance, 2022
³ “Recession vs. Depression: How To Tell the Difference” Kimberly Amadeo, The Balance, May 4, 2022, https://www.thebalance.com/recession-vs-depression-definition-causes-and-stats-3306048
Playing With F.I.R.E.
March 2, 2022
Financial Independence. Retire Early. Sounds too good to be true, right?
But for many, it’s the dream. And for some, it’s even become a reality.
What is the Financial Independence Retire Early, or “F.I.R.E.” movement? It might be obvious, but it’s a movement of people who are striving to achieve financial independence so that they can retire early. How early? That’s up to each individual, but typically people in the F.I.R.E. movement are looking to retire between their 30s and 50s.
How are they doing it? By saving as much money as possible and living a frugal lifestyle. That might mean driving a used car, living in a modest house, and cooking at home instead of eating out. They scrimp and save wherever they can to save.
So why is the F.I.R.E. movement gaining in popularity? There are a few reasons…
Some people want freedom. They want the freedom to travel, to spend time with their family, and to do whatever they want without having to worry about money.
Others are tired of the rat race. They’re tired of working jobs they don’t love just so they can make money to pay for things they don’t really want. They’d rather be doing something they enjoy and have more control over their own lives.
And finally, people want security. They want the wealth they need to live comfortably and fear-free, and they want it now. They don’t want to wait until they’re 65 or 70 to start enjoying their retirement.
It’s a challenging path. Achieving financial independence and retiring early takes hard work, sacrifice, and planning. You’ll have to face financial challenges like covering health insurance, for one.
So if you’re thinking about joining the F.I.R.E. movement, what are some of the first steps?
1. Assess your finances. Figure out how much money you need to live on each month and how much you need to save to achieve financial independence.
2. Set financial goals. Determine where you want to be financially and create a plan to get there.
3. Make a budget and stick to it. Track your spending and make adjustments as needed so you can save more money.
4. Invest in yourself. Education is key, so invest in books, courses, and other resources that will help you build your wealth.
5. Stay motivated. Follow other F.I.R.E. enthusiasts online, read blogs and articles, and attend meetups to keep yourself inspired on your journey to financial independence.
So are you ready to play with F.I.R.E.?
Living Benefits vs. Disability Insurance
February 24, 2022
Here’s a pressing question—how would your family make ends meet if your income dried up?
There are only three answers…
My family would have to seriously alter their lifestyle to make ends meet. Passive income from my business and investments would provide for my family. Insurance would provide my family with the cash they need.
For many, option 3—insurance—is the most practical solution.
Often, that looks like life insurance. It pays your family a cash sum (called a death benefit) if you pass away. The death benefit can replace your income to help your family process their grief without also facing a financial crisis.
But what if you become disabled and can’t work? If you’re like many who face a disability before age 60, the next phase of your life might be spent recovering. You may be out of the workforce for several years, or even permanently.
That’s where two different types of insurance can come into play—life insurance with living benefits, and disability insurance.
Life insurance with living benefits gives you access to your death benefit while you’re still alive. The living benefits get triggered when a qualifying event occurs, like…
Chronic illness Terminal illness Permanent disability It may be the infusion of cash that you and your family need to help cover medical bills and living expenses.
But there’s a catch—it depletes your death benefit. If you pass away, you may have little to nothing left to leave your family.
Disability insurance works more like traditional car or home insurance. You pay a monthly premium. In return, your insurer will pay you a portion of your income if you become disabled. It’s a simple way to protect your income in the event that you’re no longer able to work.
Both private insurers and government programs provide disability insurance. You can check with your human resources department or a benefits advisor at work to see if they offer the option.
So which strategy is better for you? That depends on your situation. It’s wise to consult with a licensed and qualified financial advisor before making a choice.
But keep in mind, either way—life insurance with living benefits or disability insurance—you’re helping to protect your family financially so that they can carry on, and keep doing the things that matter most to them.
Tips for Saving Money on Homeowners Insurance
February 1, 2022
Trying to free up cash flow? Then look no further than your homeowners insurance.
That’s because there are several techniques you can use to help cut down your monthly premiums. Here are a few worth trying!
Go all out on security. One of the easiest ways to save money on homeowners insurance is to make your home more secure. Installing deadbolts, window locks, smoke detectors and fire alarms, motion detectors and video surveillance will not only help keep burglars out but may also reduce your premiums.
Just be sure to count the costs before you deck out your home. It may be more expensive to go all out on security than to pay your premiums as they are. Depending on how secure you already feel in your home, investing in extra measures may not be something you choose to do just yet.
Boost your credit score. Your credit score can have a big impact on your insurance premiums. The majority of insurers use it as a factor to determine what you will pay for homeowners insurance, so if your score is low, expect to pay more.
What can you do to improve your score? For starters, focus on paying all your bills on time. Next, reduce the balance on your credit cards. It’s a good idea to set up automatic monthly payments for your utility bills and other recurring expenses. It’s a simple, one-time action that can save your credit score from slip ups and oversights.
Eliminate attractive nuisances. If you have a swimming pool or trampoline on your property, expect to pay more for homeowners insurance. Insurers view them as attractive nuisances, and raise your premiums accordingly. That includes things like…
Swimming pools Trampolines Construction equipment Non-working cars Playground equipment Old appliances
It’ll be a weight off your shoulders—and your bank account.
Maximize discounts. You might be surprised by the wide range of discounts insurance companies offer homeowners. They include everything from not smoking to choosing paperless billing to membership in specific groups. It never hurts to ask your insurer what discounts are available.
Bundle your home insurance with auto insurance. Businesses love loyalty. And they’re not afraid to incentivize it. That’s why insurance companies will often reward you for bundling your home and auto insurance together. So if you already own a car, ask your insurer if you can purchase discounted home insurance. It may significantly lower your monthly rate.
Some methods are more obvious than others, but all of them can add up to big savings over time. Ask your financial professional for their insights, then reach out to your insurer. You may be surprised by how much you save!
Why Debt Is A Big Deal?
January 21, 2022
Debt is a word that strikes fear in the hearts of many. It ruins fortunes, causes untold stress, and topples governments.
Just ask a millennial about their financial struggles—student loan debt will certainly top their list.
But why? Why is debt so bad, anyway? After all, isn’t credit just money you can use now then pay back later? What’s the big deal?
Well, actually debt is a very big deal. In fact, it can make or break your personal finances.
This article isn’t for hardened debt fighters. You already know the damage debt can do.
But if you’re just starting your financial journey, take note before it’s too late. At best, debt is a tool. It certainly isn’t your friend. Here’s why…
It begins by lowering your cash flow. All those monthly payments bite into your paycheck, effectively lowering your income.
And that has consequences.
It can make it a struggle to afford a home. You simply lack the cash flow to afford mortgage payments.
It makes it a struggle to build wealth. Every spare penny goes towards making ends meet.
It makes it a struggle to maintain your lifestyle. You may find yourself choosing between the pleasures—and even the basics—of life and appeasing your creditors.
And that brings the risk of bankruptcy. It’s a last-ditch effort to erase an unpayable debt. It comes with a heavy price—creditors can take your home and possessions to make up for what you owe. And even if bankruptcy erases the debt, it will have a lasting impact on your credit score and financial future.
It can change your life forever, throwing your life into chaos.
Think about it—when was the last time someone smiled and fondly recalled that time they went bankrupt? Never. It’s a traumatic experience. This is something you want to avoid at all costs.
This isn’t to scare you into a debt free life or guilt you for using a credit card. Rather, it’s to educate you on the stakes. Debt isn’t something to be taken on lightly. It can have lasting consequences on your life, family, finances, and even mental health. Act accordingly.
The Importance of Financial Literacy
December 20, 2021
There’s a good chance that you’re facing a financial obstacle right now.
Maybe you’re trying to pay down some credit card debt, facing a meager retirement fund, or just struggling day-to-day to make ends meet.
It’s easy to feel overwhelmed and helpless in those situations, so much so that you might think learning a little more about how to manage your money wouldn’t make much difference right now.
But adopting a few key financial tips is often the best and simplest step towards taking control of your paycheck and finding some peace of mind. Here are some reasons why financial literacy is an essential skill for everyone to master, and a few tips to help you get started!
It helps you overcome fear. Let’s face it; money can seem scary. Mounting loans, debt, interest, investing—it can all be confusing and overwhelming. It may feel easier to ignore your finances and live paycheck to paycheck, never owning up to not-so-great decisions. But financial literacy gets right to the root of that fear by making things clear and simple. It empowers you to identify your mistakes and shows options to fix them.
Facing a problem is much easier once you understand it and know how to beat it. That’s why learning about money is so important if you want to start healing your financial woes.
It lets you take control of your finances. Financial literacy does more than just help you address problems or overcome obstacles. It gives you the power to stop being a victim and take control. You can start investing in your future with confidence instead of reacting to emergencies or going into deeper debt. That means building wealth and living life on your terms instead of someone else’s. In other words…
It helps you realize your dreams. Managing money isn’t about immediately seeing a bigger number in your bank account. It’s about having the resources and freedom to do the things you care about. Maybe that means taking your significant other on a dream vacation, giving more to a cause you care about, or providing your kids with a debt-free education.
Where to start. Acknowledging that you need to learn more can be the hardest step. That’s why meeting with a financial advisor is something you may consider. Calculate how much you spend versus how much you make and write down some financial goals. Then find a time to discuss your next steps. You may also want to sign up for a personal finance class that will cover things like budgeting and saving.
Financial literacy is one of the most important skills you can develop. Improving your financial education takes some time but it doesn’t have to be difficult. Give me a call. I’d love to sit down and help you learn more about ways you can take control of your future!
Discover Your Retirement Number
September 22, 2021
How much money will you need to retire?
It’s a question that has no single answer. Everyone has different financial needs that arise from their specific situation.
But there are methods and tools you can use to discover your personal retirement number. In this article we show three ways to estimate how much you need to save for a comfortable retirement.
Use an online retirement calculator. The beauty of retirement calculators is that they’re simple. Input some data about your savings, and you’ll get an estimate of how much you’ll have in retirement. They’ll let you know if you’re on target for your retirement goals.
Always take retirement calculators with a grain of salt. They’re each built on different algorithms and assumptions, so expect a range of results.
They also don’t know you personally, or your situation. You may have specific needs and plans that they can’t take into account.
Here are a few retirement calculators you can try…
The 4% Rule. This is the tried and true strategy for discovering your retirement number. It takes a little math, so grab your calculator!
First, let’s assume your income is $60,000 per year.
Next, let’s say that your annual retirement income must be 80% of your current annual income. So that’s $48,000.
Now, divide that by 4%…
$48,000 ÷ 0.04 = $1,200,000
Using the 4% Rule, you would need to have saved $1,200,000 to retire on 80% of your current income ($1,200,000 ÷ $48,000 = 25 years).
The Income Scale. This strategy, recommended by Fidelity, is more of a rule of thumb.¹
It aims for you to save 10x your annual income by age 67. It provides benchmarks along the way…
-1x by 30 -3x by 40 -6x by 50 -8x by 60
The only issue with this strategy is that 10x your income may not be enough for a comfortable retirement. For instance, a family earning $60,000 per year would only have $600,000 saved!
Each of these tools will help you estimate your retirement number. But the best way to discover your true number is to meet with a licensed and qualified financial professional. They can help you consider all the variables that may impact your retirement, and how to prepare.
How income annuities can benefit your retirement plan
By: Dan Farrelly & Kam Harris
August, 22, 2021
Do you like the idea of putting a plan in place for your retirement income? If so, let’s dig into how an income annuity could benefit your retirement plan.
We insure our cars, homes and lives. Shouldn’t we insure our income too?
An income annuity is a solution that can guarantee you an income stream for as long as you live. Plus, an income annuity could be the foundation of a protection-first approach to your retirement income, helping you cover your expenses in retirement.
How an income annuity can work for you
A type of income annuity, a fixed indexed annuity (FIA), protects your principal, is never directly invested in the market and has the potential to earn some interest tied to a market index. And like all annuities, an FIA offers lifetime income, tax deferral and death benefit features for your beneficiaries.
There’s a rider called a guaranteed minimum withdrawal benefit (GMWB) that allows you to protect and plan for your income at the same time. A GMWB rider may be optional or already built into the FIA depending on the company and specific product. Be sure to talk with your financial professional to know what your options and limitations may be.
From the protection side, the income you receive from an FIA will never decrease due to stock market losses. You choose the amount you use to fund the annuity based on the percent of your retirement income that you want guaranteed.
From the income planning side, an income annuity with the GMWB rider can offer you the potential to create more income with less cash from the start. For example, if you’re able to take money out of the annuity at a higher percentage than the normal 4.0% safe-withdrawal rate, you may not need as much cash to begin with — potentially leaving extra cash on hand for you to use or save as you need.
Let’s look at a hypothetical situation.
Assume a 60-year-old woman has other income sources (e.g., Social Security) and has a gap of $36,000 per year in her retirement income plan. She wants to earn a 7.0% return each year on her money to make her income last throughout her lifetime, assuming she takes income starting at age 70.
If this woman doesn’t have an FIA or a GMWB rider but wants a 7.0% annual growth rate from a typical diversified portfolio, she will need to start with $460,000 up front. By age 70, that value is worth $904,890. By taking a 4.0% withdrawal rate, she would receive the $36,000 that she needs each year.
However, this diversified portfolio without a guaranteed income annuity is not contractually guaranteed to last as long as she lives. Therefore, she could potentially outlive her money. Also, it’s unlikely that she could earn 7.0% every year for 10 years. If her assets are invested in the market, she could potentially have a loss of her principal.
Now, if she has an FIA with a GMWB rider, in this example, she would need about $329,500 up front. By age 70, that value would be worth $670,110. She would then take a 5.3% withdrawal rate to get the $36,000 she needs each year. While the value at age 70 is lower than the first example, the withdrawal percentage is higher, the income is guaranteed to last as long as she lives and she needs less cash up front.
Person without an FIA Person with an
but with 7% annual growth FIA and GMWB rider
Initial capital needed $460,000 $329,500
Income value – Age 70 $904,890 $679,110
Withdrawal rate 4.0% 5.3%
Income per year $36,000 $36,000
Guaranteed for life? No Yes
The above example is hypothetical and is not an indication of the annuity’s past or future performance. The non-FIA values are not contractually guaranteed. The annuity income in this example is based on, as of April 2021, a 60-year-old woman purchasing an F&G 7-year fixed indexed annuity with a GMWB rider providing an income base rolling up at 7.5% per year and a 5.3% guaranteed withdrawal payout percentage at age 70. The diversified portfolio assumes a 7.0% annual return for 10 years and a 4.0% withdrawal rate in the first year of income.
All in all, an income annuity can create a level of certainty in your retirement plan.
Now that we’ve talked about the importance of protecting your retirement income, a next step would be to talk with your financial professional about adding an income annuity to your retirement portfolio.
The Difference 15 Years Can Make
August 7, 2021
Choosing between a 15-year and 30-year mortgage is one of the most important financial decisions you’ll make.
The answer which is better for you depends on your personal situation, but there are definite pros and cons to each. In this article we’ll take a look at both types of mortgages and see what they offer along with their drawbacks so that you can make a more informed decision about which mortgage works best for you.
The 15-Year Mortgage. As the name suggests, a 15-year mortgage has payments spread over 15 years, as opposed to 30 years for the standard loan. That has two practical implications…
Your monthly payments will probably be higher
The total cost of the home will likely be lower
Those might seem contradictory. But the math is simple.
Let’s say your monthly payment for a 15-year mortgage is $1,000, while for a 30-year mortgage your payment is $750.
For the 15-year mortgage, you’ll pay $180,000 over the lifetime of your loan. For the 30-year loan, that number is $270,000, a $90,000 difference! So if you can afford the higher monthly payments, a 15-year mortgage might save you a substantial amount of cash over the long-term.
The 30-Year Mortgage. But make no mistake—the 30-year mortgage has distinct advantages of its own. How? It often offers lower monthly payments, which frees up your cash flow. That extra money can go towards saving, financial protection, and building wealth.
Not every family will have the financial resources to afford potentially higher monthly payments with a 15-year mortgage. Depending on your financial situation, a 30-year mortgage may be a better option.
The bottom line? The mortgage you choose can impact your financial security now and in the future. That’s why it’s best to consult with a financial professional before buying a home. They’ll have the knowledge you need to make an informed decision that aligns with your long-term goals.
Keeping the House
July 18, 2021
Life Insurance can save your house.
A couple owns a beautiful home out in the suburbs. It’s where they’ve raised their children and made memories that will last a lifetime.
Until one of them passes away too soon. Suddenly, the whole picture shifts. See, they are a two income household. They relied on both income streams to buy groceries, cover children’s education… and pay the mortgage.
Now, the surviving partner isn’t simply coping with grief. They’re facing the potential loss of their house, with all of its memories and meaning, as well.
It’s not a far-fetched scenario. Death is one of the Five D’s of foreclosure—the others are divorce, disease, drugs, and denial.
Life insurance can help. It’s the safety net to have in place to protect your family from financial uncertainty and provide for their future.
That’s because the death benefit that’s paid out to your loved ones can cover the cost of mortgage payments, or possibly even pay off your mortgage entirely.
What does that look like in the scenario from earlier?
First, it prevents a personal tragedy from becoming a financial crisis. The last thing a grieving person needs is to have to cope with financial stress.
Second, it means that the grieving partner could keep the house if they so desire. After some time has passed, they can make plans on what the future of their life should look like, without undue financial restrictions.
If that’s a peace you would like to help provide to your family, contact me. We can review what life insurance would look like for you and your budget.
July 5, 2021
Considerations in Creating a Will
Mortgage Protection: One Less Thing To Worry About
June 9, 2021
How many things do you worry – er, think – about, each day? 25? 50? 99?
Here’s an opportunity to check at least one of those off your list. Read on…
Think back to when you were involved in the loan process for your home. Chances are good that at some point during those meetings, a smiling salesperson mentioned “mortgage protection”.
With so many other terms flying around during the conversation, like “PMI” and “APRs”, and so much money already committed to the mortgage itself – and the home insurance, and the new furniture you would need – you might have passed on mortgage protection.
You had (and hopefully still have) a steady job and a life insurance policy in place, so why would you need additional protection? What could go wrong?
Before we answer that, let’s clear up some confusion.
Mortgage Protection Insurance is not PMI. <br> These two terms are often used interchangeably, but they are not the same thing.
Both Private Mortgage Insurance (PMI) and Mortgage Protection are insurance, but they do different things. PMI is a requirement for certain loans because it protects the lender if your home is lost to foreclosure.
Essentially, with PMI you’re buying insurance for your lender if they determine your loan is more risky than average (for example, if you put less than 20% down on your home and your credit score is low).
Mortgage protection, on the other hand, is insurance for you and your family – not your lender.
There are several types of mortgage protection, but generally you can count on it to protect you in the following ways:
Pay your mortgage if you lose your job
Pay your mortgage if you become disabled
Pay off your mortgage if you die
Say, That Sounds Like Life Insurance. <br> Not exactly. Mortgage protection actually can cover more situations than a life policy would cover. Life insurance won’t help if you lose your job and it won’t help if you become disabled. Mortgage protection bundles all these protections into one policy – so you don’t need multiple policies to cover all the problems that could make it difficult to pay your mortgage each month. (Hint: A life insurance policy would be a different part of your overall financial plan and often has its own separate goals.)
How Does Mortgage Protection Work? <br> A mortgage protection policy is usually a “guaranteed issue” policy, meaning that many of the roadblocks to purchasing a life insurance policy, such as health considerations and exams, wouldn’t be there.
If you lose your job or become disabled, your policy will pay your mortgage for a limited amount of time, giving you the opportunity to find work or to make a backup plan. Again, your house is saved, your family still has a roof over their heads, and you’re a hero for thinking ahead. Accidents happen and people lose their jobs every day. Mortgage protection is there to catch you if you fall.
One More Thing… <br>
A mortgage protection policy is a term policy, so you don’t need to keep paying premiums after your house is paid off.
Now that you know a little bit more about mortgage protection policies, have those 99 worries ticked down to 98? Reaching out to me for guidance on your financial worries could help you make that number smaller and smaller… 97… 96… 95…
How to Make the Most of Your Life Insurance Policy?June 7, 2021
Your life insurance policy is one of the most important things you’ll buy in your lifetime.
Knowing how to make the most of it will help you sleep better at night and more easily plan for the future. We’re going to cover the aspects of life insurance with a focus on making those numbers work for YOU!
Choose a policy with enough coverage. As a rule of thumb, a life insurance policy should provide a death benefit that’s at least 10X your annual income. Why? Because the benefit can serve as an income replacement for your family if you pass away. A payout above 10X your annual income can provide your family with a generous financial buffer to recover and make a plan for their future. Buying enough coverage helps ensure your policy fulfills its function—to financially protect your family when you pass away.
Choose the right type of insurance. There’s no one-size-fits-all life insurance policy. They each have different strengths and shine in different circumstances.
Term life insurance, for instance, is typically better for families who need protection on a thin budget. That’s because term is often an affordable option for securing a large death benefit.
Permanent life insurance might be better if you’re looking for an investment that grows over time. It’s also a good choice if you need lifelong protection for your spouse and children, but don’t want to be burdened by higher premiums as they age. That makes it particularly attractive to families with permanent dependents or who are interested in wealth-building vehicles.
Choose a policy that fits your budget. Life insurance shouldn’t consume your income. Rather, it should protect your income in case of disaster. Get as much life insurance as your family needs, but don’t add all the bells and whistles if you can’t afford it!
You want a life insurance policy that protects your family, aligns with your goals, and doesn’t break your budget. If you’re not sure what that looks like, meet with a licensed and qualified financial professional. They can help you hammer out goals and find policies that help you meet those goals!
Fixed and Variable Interest Rates: Which One's For You?
June 2, 2021
Fixed interest rates are stable, but variable rates may save you money?
Which may be right for you? Read this article to find out!
First, some housekeeping—what’s the difference between fixed and variable interest?
It’s exactly what it sounds like. A fixed interest rate remains the same throughout the life of the loan. Variable rates, however, are typically tied to another interest rate. If that rate changes, your rate changes.
So what does that mean for you?
In general, fixed interest rates are safer. Because they’re locked in, they won’t suddenly skyrocket if the economy changes. However, their rates are initially probably higher. You’re trading overall payment for stability
Variable rates, then, can seem like a better deal. Historically, data shows that borrowers pay less on variable rate loans than fixed rate loans. But there are two important things to consider…
Past performance never guarantees future returns. Just because variable rates saved people money in the past doesn’t mean they will in the future.
Variable rates can have catastrophic outcomes. In 2008, families with adjustable rate mortgages suddenly found their interest rates skyrocketing. Many weren’t able to pay their bills and foreclosed, which contributed to the Great Recession.
The takeaway is that variable rates are not to be treated lightly. Consult with a licensed and qualified financial professional before you borrow money. Their knowledge of the current financial landscape can help you choose an interest rate type that works best for you and your goals.
Why Families Buy Term Life Insurance?
May 24, 2021
Why does term life insurance seem to be so common among your friends and family?
For many, it’s simply the most affordable strategy for securing life insurance. And that means it can provide critical financial protection for many different situations. Here are a few of the most common reasons families choose term life insurance.
The power of term life insurance is that it’s typical affordable. It provides a death benefit for a limited term, typically 20-30 years, which means you can often purchase more protection at a lower price than other types of policies. As long as your protection lasts while you have financial dependents, you’re covered.
But there are more pragmatic reasons why families buy term life insurance. For many, it serves as a source of income replacement. When a breadwinner passes away, the income they provide is gone. That means a family might find themselves with a serious cash flow deficiency in addition to the tragic loss. The death benefit can replace the lost income.
A family might also need to purchase life insurance when they have dependents, such as college-aged kids with high educational expenses. If a family has dependents and no life insurance, the burden of funding higher education falls on the family, who are down an income. With term coverage in place, they have the financial power to help cover those bills with confidence.
Term life insurance can also be invaluable for families with high debt obligations. Because it’s often so affordable, term life insurance may provide significant coverage without diverting financial resources away from getting out of debt. And, if the policyholder passes away before the debt is eliminated, the death benefit can also go towards finishing off loans.
Finally, term life insurance can be used to cover the costs of funeral expenses. Families who don’t have any other form of coverage for these out-of-pocket bills often need extra cash to cover the costs of burial. Term life insurance is a simple way to pay for the funeral the family needs.
In conclusion, term life insurance can be a great way to cover the costs of many big ticket items and expenses at a reasonable cost. Would that be a good fit for your family? Contact me, and we can explore what it would look like for you!
Why You Should Care About Insurable Interest?
May 5, 2021
First of all, what is insurable interest?
It’s simply the stake you have in something that is being insured – and that the amount of insurance coverage for whatever is being insured is not more than your potential loss.
To say things could become a bit awkward might be an understatement if your insurable interest isn’t considered before you’re deep into the planning phase of a project or before you’ve signed some papers, like a title or a loan.
It’s better for your sanity to understand insurable interest beforehand. Where the issue of insurable interest often arises is in auto insurance. Let’s look at an example.
Let’s say you have a car that’s worth $5,000. $5,000 is the maximum amount of money you would lose if the car is stolen or damaged – and $5,000 would be the most you could insure the car for. $5,000 is your insurable interest.
In the above example, you own the car, so you have an insurable interest in it. By the same token, you can’t insure your neighbor’s car. If your neighbor’s car was stolen or damaged, you wouldn’t suffer any financial loss because it wasn’t your car. Here’s where it might get a little tricky and why it’s important to understand insurable interest. Let’s say you have a young driver in the house, a teenager, and it’s time for him to go mobile. He’s been saving up his lawn-mowing money for two years and finally bought the (used) car of his dreams.
You might have considered adding your son’s car to your auto policy to save money – you’ve heard how much it can cost for a teen driver to buy their own policy. Sounds like a good plan, right? The problem with this strategy is that you don’t have an insurable interest in your son’s car. He bought it, and it’s registered to him.
You might find an insurance sales rep who will write the policy. But there’s a risk the policy won’t make it through underwriting and – more importantly – if there’s a claim with that car, the claim might not be covered because you didn’t have an insurable interest in it. If you want to put that car on your auto insurance policy, the car needs to be registered to the named insured on the policy – you.
Insurable Interest And Lenders If you have a mortgage or an auto loan, your lender is probably listed on your policy. Both you and the lender have an insurable interest in the house or the car. Over time, as the loan is paid down, you’ll have a greater insurable interest and the lender’s insurable interest will become smaller. (Hint: When your loan is paid off, ask your agent to remove the lender from the policy to avoid any confusion or delays if you have a claim someday.)
Does Ownership Create Insurable Interest? Excellent question! It might seem like ownership and insurable interest are equivalent – they often occur simultaneously. But there are times when you can have an insurable interest in something without being an owner. Life insurance is a great example of having an insurable interest without ownership. You can’t own a person – but if a person dies, you may experience a financial loss. However, just as you can’t insure your neighbor’s car, you can’t purchase a life insurance policy on your neighbor, either. You’d have to be able to demonstrate your potential loss if your neighbor passed away. And no, it doesn’t count if they never returned those hedge clippers they borrowed from you last spring!
Now you know all about insurable interest. While insurable interest requirements may seem inconvenient at times, the rules are there to protect you and to help keep rates lower for everyone. Without insurable interest requirements, the door is open to fraud, speculation, or even malicious behavior. A little inconvenience seems like a much better option!
THE RULE OF 72
May 3, 2021
So you’ve got a chunk of change and the know-how to put your money into an account that earns compounding interest.
How long does it take for your money to double in that account? Well to find this out you need two things: your balance and your interest rate. Now, like most things there’s an easy way to find your answer and a hard way. The hard way involves taking the logarithm base 10 of 2. Two as in, two times our balance over the logarithm base 10 of 1 plus our interest rate. (Apologies for causing any unnecessary math class flashbacks.) Since most of us don’t have bionic brains, we can’t really crunch numbers like these in our heads.
The simple way to make an educated guess about how long it takes for your money to double in a compound interest account? The Rule of 72.
The way it works is surprisingly easy (and won’t require a graphing calculator). All you do is take the number 72 and divide it by your interest rate. That’s it! It really is that straightforward. The number you get equals the number of years it’s going to take to double your money.
Let’s try it out: Say you have $5,000 in your account earning 4% interest. Now take that magical number 72, take your interest rate of 4%, pull out your phone and text your 2nd grade cousin and ask him how many times 4 goes into 72. He’s a bright kid, so he’ll tell you the answer is 18, and you’ll tell him that he just helped you learn that it will take 18 years for your initial $5,000 to double into $10,000.
Using the Rule of 72, it’s easier to see how small changes in interest rates can make a huge difference in earning potential. A 29-year-old earning 4% compounding interest can expect his account to double twice by the time he’s 65. At 8%, it doubles 4 times. At 12%, it doubles 8 times. So by doubling your interest rate from 4% to 8% you actually quadruple your money. And by tripling your rate from 4% to 12% you sixteen triple your money. That’ll work.
Interest rates matter. The Rule of 72 shows just how much they matter. So how many doubling periods does your nest-egg have before you retire? Now you know the easy way to find out. Click this text to start editing. This block is a basic combination of a title and a paragraph. Use it to welcome visitors to your website, or explain a product or service without using an image. Try keeping the paragraph short and breaking off the text-only areas of your page to keep your website interesting to visitors.
The 5 Things To Do With Your Inheritance
April 28, 2021
Reading regularly is one of the most important disciplines you can have in life.
Practically, it’s almost impossible to function in the modern world without being able to read. But there’s a far deeper benefit to regular reading. Just ask Bill Gates—he reads 50 books per year! Why? Because “You don’t really start getting old until you stop learning… Reading fuels a sense of curiosity about the world, which I think helped drive me forward in my career.”¹
That’s high praise! Let’s explore the benefits of consistent, disciplined reading.
First, reading is quite literally good for your brain. Studies have demonstrated that even reading fiction strengthens brain connections, reduces your risk for mental ailments like depression, and brain diseases like Alzheimer’s.² So if you want your brain to thrive, grab a book, even if it’s a light-hearted novel, and start reading!
Second, reading can improve your quality of life. As mentioned earlier, reading can combat mental health issues like depression. But studies seem to suggest that reading fiction can also improve qualities like empathy.³ After all, novels can offer explorations of the human experience. Reading about how others feel and live, even if they’re invented, can broaden your emotional horizons and encourage you to reflect on your own feelings. It also exposes you to new information and new ideas that can enrich your perspective. It’s an introduction to a virtually limitless world of knowledge and experiences.
The takeaway? Make a habit out of reading! There’s no shame in what you read, whether it’s a fantasy series, a Jane Austen novel, or philosophy essay! Start a book club with some friends and discuss what you read. You may be surprised by the benefits you experience.
¹ “Bill Gates Discusses His Lifelong Love for Books and Reading,” Claire Howorth and Samuel P. Jacobs, Time, May 22, 2017, https://time.com/4786837/bill-gates-books-reading/
² “Benefits of Reading Books: How It Can Positively Affect Your Life,” Rebecca Joy Stanborough, MFA, Healthline, Oct. 15, 2019, https://www.healthline.com/health/benefits-of-reading-books
³ “How Reading Fiction Increases Empathy And Encourages Understanding,” Megan Schmidt, Discover Magazine, Aug 28, 2020, https://www.discovermagazine.com/mind/how-reading-fiction-increases-empathy-and-encourages-understanding
Pay Yourself First!
April 26, 2021
Pay yourself first!
Why? Because it can help you take control of your finances and reach your goals. But what does it mean to “pay yourself first?” It means the very first thing you should do with your paycheck is put money towards saving, then use what’s left for bills, and then finally for personal spending. Let’s break down how—and why—you should pay yourself first in 3 steps!
Step 1: Figure out your goals. What are you saving up for? Knowing what goal you’re trying to reach can help guide how much money should go towards it—saving for retirement would look different than saving for a downpayment on a house. Having a goal can also give you the motivation and inspiration you need to start saving in earnest. Write down your goal or goals, and start planning accordingly.
Step 2: Make a budget that prioritizes saving. When you’re creating your budget, the first category you should create is saving. Then, figure out how much rent, bills, food, and transportation will cost. Whatever you have left can go towards discretionary spending. Your focus should be to treat saving like a mandatory bill. It’s a simple mental trick that can help you prioritize your financial goals and help make it much easier to say no when you’re tempted to overspend. You actually might literally not have the cash on hand because you’re saving it!
Step 3: Automate your saving. Once you’ve got your savings goal in place, automate the process. Whether it’s through an app or automatic deposits from your checking into a savings account, automating saving helps make building wealth so much easier. You can start building wealth without even thinking about it! Just be sure to automate your deposits to initiate right after your paycheck comes in. It removes the temptation to cheat yourself and overspend.
Remember, this doesn’t have to be all or nothing. Just because you can’t save a massive amount each month doesn’t mean you shouldn’t try! It’s about saving as much as you can. And paying yourself first with your paycheck is an easy way to start!
The Time Value of Money and College
April 14, 2021
College is one of the most expensive things that you can spend your money on, but it might not always be a good investment.
College graduates make much more than high school graduates over their lifetimes.¹ Some people think this means going to college is worth the cost because they’ll be able to pay off the loans with their higher salaries after graduation. But as you’ll see in this article, there’s another critical factor you should consider before going off to school.
Which career path will empower you to start saving sooner? The longer your money can accrue compound interest, the more it can grow. Working an extra four years instead of attending school could result in retiring with more. Let’s consider two hypotheticals that illustrate this point…
Let’s say you land a job straight out of high school at age 18 earning $35,000 total annual salary. You’re able to save 15% of your income in an account where the interest is compounded monthly at 9%. Assuming you work until 67, or 49 years, and consistently save the same amount each month over that time period at the same interest rate, you would retire with almost $4 million!
What if instead you attend college and graduate after 4 years? You land a job that pays $60,000 annually and are able to save 15% of your income. If you also retire at 67 after 45 years of work, saving 15% every month, you’ll retire with $4.7 million. That’s almost $700,000 more than the non-graduate!
But what if student loans prevent you from saving for 5 years after graduation? You’d retire with $3 million. In this hypothetical scenario, losing 9 years of saving results in a college graduate actually retiring with less than someone who diligently works and saves right out of high school.
The takeaway isn’t that you shouldn’t attend college. It’s that you should carefully weigh the costs of higher education. Is there a career path you could take right out of high school that would have you saving right away? Will your degree land you deep in debt and behind the 8-ball for building wealth? Or do the benefits of the degree substantially outweigh the costs? Don’t attend a college just because it’s what your peers are doing. Consider your passions, weigh the benefits, and calculate the costs before you make your decision!
This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Any examples used in this article are hypothetical. Before investing, enacting a savings or retirement strategy, or taking on any loans or debt, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.
The Power of Living Benefits!
April 8, 2021
Preparing for the possibility of a critical medical illness or condition is probably not high on your list of fun things to do.
But its importance cannot be overstated—two-thirds of people who file for bankruptcy do so because of medical debt.¹
What many don’t know, however, is that life insurance can help you shoulder the high cost of medical care… if you utilize living benefits!
How living benefits work?
Almost all life insurance policies come with a death benefit. It’s money that will go to your beneficiaries when you pass away. A living benefit is a feature of some life insurance policies that allows you to access the death benefit while you’re still alive.
So let’s say you have a life insurance policy with a $400,000 death benefit. You suddenly get diagnosed with a serious illness that requires you to take time off work and undergo intensive medical treatment.
That means you’re facing a substantial expense with a decreased income. Your medical crisis has also become a financial crisis!
But what if you could access your death benefit in the present? $400,000 may cover a substantial portion—perhaps even all—of the cost of treatment.
And you don’t have to use your entire benefit. If your medical bills add up to $100,000, you could use $100,000 from your life insurance policy to cover your expenses, and leave the remaining $300,000 as the death benefit!
Keep in mind that only certain types of illness may trigger your ability to access your benefit. That’s why it’s important to work with a licensed and qualified financial professional to create the right policy for you. If you’re interested in what living benefits would look like for you, contact me. We can review your income and how much life insurance your family needs!
How To Talk To Your Spouse About Money
October 7, 2020
Family finances isn’t always a fun topic.
But getting in the habit of discussing money early on in your relationship may help pave the way for a smoother future. Whether or not you see eye to eye, learning each other’s spending habits and budgeting styles can help avoid any financial obstacles in the future. Below are some tips on getting started!
Talk about money regularly
One of the best ways to approach a conversation about money is to decide in advance when you’re going to have it, rather than springing it on your spouse out of the blue. Family budgeting means making the time to talk upfront and staying transparent about it on a consistent basis. If you and your spouse choose to set a monthly or annual budget, commit to sitting down and reviewing family expenses at the end of each month to see what worked and what didn’t.
Start a budget
It’s easy to feel overwhelmed if you don’t have a family budget and don’t know where to start. However, with the development of mobile applications and online banking, you can now more easily track your spending habits to find ways to cut unnecessary expenses. For example, if you see that you’re going out to dinner most nights, you can try replacing one or two of those evenings out with a home cooked meal. Small changes to your routine can make saving easier than you might have thought!
Remember your budgeting goals
Budgeting comes down to a simple question—how will these money decisions affect the happiness of my family? For example, you might need to ask yourself if taking an awesome vacation to your favorite theme park will give your family more happiness than fixing your minivan from 2005. Can’t do both? You aren’t necessarily forgoing the vacation to fix your car; instead, you might need to invest in your car now rather than potentially letting a problem worsen. You might then decide to rework your budget to set aside more money every month to take the trip next year.
The key is that talking to your spouse about money may actually become more about talking to them about your goals and family. When you put it that way, it may be a much more productive and rewarding conversation!
Even if you haven’t discussed these things before you walked down the aisle, it’s never too late to sit down with your spouse. This topic will continue over time, so talking about your financials with your partner as you approach new milestones and experience different life events as a family can help you financially prepare for the future.
Life Insurance Next Steps
During the course of Life Insurance Awareness Month, we’ve been focusing on understanding the ins and outs of life insurance.
We’ve discussed why life insurance is necessary, who needs it, what kinds of protection are available and even defined key terms so you can know exactly what you’re looking at!
So what’s next? Application.
Dale Carnegie once said, “Knowledge isn’t power until it is applied.”
There’s an obvious difference between knowing about life insurance and actually being insured. So how do you get started? If you’re looking at getting life insurance for yourself or a loved one, here are 3 helpful steps to consider.
1. Reflect on what’s important. Now this may seem like an obvious thing to do, but it’s absolutely critical that you think about the areas of your life that you really care about and nail those down. Ask yourself, “If something happened to my ability to earn income, who would be affected and who do I specifically want to be cared for?” Your answer(s) to this question will help determine what needs to be protected.
2. Determine your budget. After you’re done with the first step, it’s time to put your money where your mouth is. How much would you be willing to set aside to ensure those things are protected? Run a thought experiment in your mind: “Would I be willing to set aside $50 per month? $100? $200? $400?” This process will help you ‘take the temperature’ about what you’re willing to commit.
3. Seek guidance. Find a licensed and trained financial professional you trust and who offers life insurance products to give you an accurate quote or illustration based on your situation. They will be able to guide you on finding the right type and the right amount of insurance to fit your needs.
No one likes to think about what would happen in the event of a premature death, disability, or critical illness. But whether we think about it or not, the reality is the same: people we care about will be affected by the loss of an income earner. Remember, life insurance isn’t something we can buy in a store. You have to apply! Owning life insurance is more of a privilege than it is a right. So don’t merely spend time accumulating knowledge. We encourage you to apply that knowledge…and in this case, apply for life insurance!