Money For Lunch – Managing Automatic Expenses: Insurance Should Never be Left on the Side of the Road

Managing Automatic Expenses: Insurance Should Never be Left on the Side of the Road

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Some bills vary from month to month, such as utility expenses and credit card bills. Others can be deferred or easily changed, such as grocery expenses and some transportation costs. But most people have at least some bills that are the same every month and must be paid no matter what.

Even though these bills have almost no wiggle room in terms of payment or due date, there are some ways you can control auto insurance and other such costs.

Rent/Mortgage

Most people spend between a quarter and a third of their income on housing, making this bill the largest one that most people pay. One good way to get control of this expense is to make thirteen payments a year. Most families will not miss the extra $100 a month or so, and in just a few months, there will be a substantial prepaid balance. That balance makes it easier to negotiate with the lender or landlord if money is a little tight one month.

Also remember that almost everything is negotiable. The monthly rent amount did not come down in stone from a mountain. The landlord may very well say”no” to a reduction, but you don’t get anything unless you ask. Mortgage refinancing is probably an option if your credit history is solid and you have some equity in the residence.

Installment Loan Payments

The same thirteen-payment-a-year rule is good to follow for student loans and other installment loans, and for the same reason. Furthermore, there are many government assistance programs available to assist such debtors if the need arises.

Most lenders also offer flexible payment dates, and it’s important that the payment date coincide with a date that there is usually money in the bank. Moreover, many debtors offer discounts for automatic debits and other such payments.

Auto Insurance

There are a number of ways to save money on auto insurance, and the full coverage vs. liability-only difference is one of the most obvious choices. Once there is no longer an outstanding loan balance on the vehicle, owners have the option to reduce their coverage. To know when to decrease coverage, the Rule of Ten is a good guideline:

  • Ten Years: Once a car is more than ten years old, at least one other area of the Rule of Ten often applies.
  • Ten Percent: Most drivers drop full coverage in favor of liability only when full coverage costs more than 10 percent of the vehicle’s blue book value plus the collision deductible. So, if the car is worth $3,000 and you have a $500 deductible, if your premium is more than $350 per year, you’re probably paying too much.
  • Ten Times: If you have more than ten times the premium in savings ($3500 in the above example), dropping full coverage may be the right move.

The Rule of Ten is more of a guideline, as the decision to reduce coverage is always a significant one.

Raising a deductible is another good way to lower auto insurance premium payments. The less risk the company assumes, the less it charges for the insurance policy.

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