The change in seasons

A great time to reassess your finances

As we approach the autumn months, naturally we begin to think about packing away our shorts and summer clothes in exchange for sweaters and parkas. We stop worrying about our air conditioning bill and begin to think about how to pay our heating bill. However, we may overlook the opportunity that these seasonal changes bring to assess other aspects of our lives — particularly the financial aspects.
According to many accountants, financial planning is especially pertinent now. Late summer and early fall are the best times to analyze your finances. The idea is to get everything in order today because you won’t be able to change the bottom line when December 31st rolls around. A good place to start is by taking a long, hard look at your net worth, or where you stand financially. Make a two-columned list that has your assets on one side and your liabilities on the other:

Assets
• Total value of your home and/or other real estate
• Balances in savings and money market accounts
• Value of all your investments combined (stocks, bonds, mutual funds, etc.)
• Amounts of all 401(k) and IRA accounts not included above
• Value of an Ownership interest in a business

Liabilities
• Your outstanding mortgage
• Total due on credit cards and loans
• Total amount due for property settlements or other judgments/debts
• Amount you owe in alimony or child support
Subtract your liabilities from your assets. What remains are the resources you have to begin building a strong financial foundation! Don’t stress if you aren’t satisfied with this number right off the bat. Most people aren’t. If you come up with a negative number, your first step is to implement a budget to pay off all non-mortgage debt: stop using your credit cards, begin saving monthly, and establish an emergency fund.
This brings you to the next step in the process: Come up with a plan to turn this foundation into a wealth building opportunity through a combination of savings, investment and insurance vehicles. Consider these saving options:

Savings options
• Certificates of Deposit (CDs) — generally offer a higher rate of return, but may require you to tie up your money for months or years at a time.
• Money Market Accounts — deliver a rate of return that’s similar to, but usually less than a CD, combined with the ability to withdraw funds when needed.
• 529 Educational Savings Plans — flexible savings plan that allows you to save amounts (in excess of $250,000 per student) tax-deferred to cover educational expenses.
Also consider saving through retirement options:
• Individual Retirement Accounts (IRAs) — there are two types available. With Traditional IRAs you can contribute as much as $4,000 a year in 2007 ($5,000 if 50 or older) and deduct your contribution from your tax return. These amounts increase in 2008 to $5,000 for those under 50 and $6,000 if you are 50 and over.
• 401 (k) Retirement plans — offered by many employers as a way to encourage employees to save for retirement. Many companies match a certain percentage of employee contributions.
While investing in the future through savings and retirement plans is a given, a financial area many people forget to consider is life insurance. According to the Insurance Information Institute, millions of Americans don’t carry any life insurance at all; millions more don’t have enough to provide sufficient financial security for their families.
This is changing, however. The Insurance Institute reports that, on average, premiums for individual life insurance have been falling about five percent a year since 2000 and are expected to drop an additional four percent in 2007. Premiums have gone down because people are living longer. Interested consumers should take advantage of the downward trend and tendencies of competitive markets. According to Mike Akker, Chief Investment Officer of SBLI USA Mutual Life Insurance Company, “There’s never been a better time to purchase life insurance to protect your family than right now.”

Here are some of the options to consider
• Whole life insurance — Also called permanent life insurance. It features coverage that lasts an entire lifetime and typically offers cash value that may accumulate tax-deferred. This kind of insurance eliminates concern about qualifying for insurance later in life.
• Term life insurance — Coverage that lasts a specific period of time. It provides affordable security and is an attractive option for families purchasing life insurance for the first time.
• Annuities — A contract with the insurance company to provide guaranteed payments at a specific time, drawn from funds you have entrusted to that company. Your funds may earn interest at a fixed or variable rate, depending on the option you choose.
With change in the air, now is the time to start thinking about your financial future. Do you want to know more about the products listed here as well as others? As you longingly stow away your swimsuits and start to think about curling up by the fire, you should also consider visiting www.sbliusa.com, where you’ll benefit from free access to financial planning resources, including interactive calculators, real life stories, informative articles, product guides and more.
Courtesy of ARAcontent

Financial Planning
Your greatest asset is your ability to earn an income

The first week of this month is Financial Planning Week and, with the number of American workers who suffer income-limiting disabilities on the rise, “disability” financial planning and preparation have never been more important for America’s workforce.

If you experienced an accident or illness and could not return to work for a few months — or even years — how would you and your family manage financially?
The Council for Disability Awareness (CDA) has prepared five questions to help you understand how you would handle your regular expenses during a period of lost income due to an accident or illness:
1. What are my “necessary” monthly living expenses that would continue even if my income stopped? My rent or mortgage, utilities, food, medical insurance?

2. Would my personal savings pay for my “necessary” monthly expenses–for one month, three months, six months, longer? Would my savings also cover my “out–of–pocket” medical expenses (deductibles and co-pays)?

3. Does my employer have a sick pay plan or long-term disability program, or both? Am I participating? When would it start, how much would it pay me and for how long?

4. What other sources of income might be available to help me pay for my expenses? My spouse’s income, second mortgage, retirement funds, credit cards?

5. Could I afford my medical COBRA premiums, and what would happen to the contributions to my 401(k) account or retirement plan?

“For most folks, their greatest asset is their ability to work and earn an income,” explains Robert Taylor, president of the Council for Disability Awareness. “If you should lose that ability, it’s important for you to understand how you would manage and plan accordingly. The five questions are a good start to planning ahead.”
To learn more about tools and resources that can help you assess your current financial situation and enhance your financial security, visit the CDA website, www.disabilitycanhappen.org.

Courtesy of ARA Content