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Welcome together, we're gonna explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home and a car payment and you're struggling to get credit cards under control, or you're getting in a later start in life on saving for retirement, reducedebtincreasewealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments.

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Mr. Chuck here, this episode I'm going to talk about insurance is not really my cup of tea ,

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but it's something we all need to consider. I have broken insurance down into insurance that's required that you're required to have insurance that you need.

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Have an other insurance that you should consider when that time comes.

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I figure if I broke it down into those three categories that might make it easier to understand, make more sense.

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Insurance required is a category where if you buy something and you have a loan on it, the lender requires you to cover insurance such as an automobile, or a home.

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Sometimes insurance is recovered by the state or government agency, such as automobile if you don't have a loan on an automobile, then insurance may be required by the state in order to have a license plate on that car. Why do you need insurance

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other than when it's required. Allow insurance

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can minimize your financial liability in case of something bad happening for auto insurance. If If your brakes go out, for example, and you run off the road, knock over somebody's mailbox and run into the car parked in their driveway, your insurance rule help you pay for the cost of getting everything fixed and pay for the cost of getting your car fixed. If you run off the road and hit a tree, and you it's a big tree and it totals your car, then surance is gonna most likely, if you're lucky, pay off the loan on the car, give you a few dollars in your pocket. You don't have to keep on paying that that loan.

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That's why you have insurance. And also you have insurance to protect yourself in case the unexpected happens for homeowners insurance.

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If you live in an area where hurricanes are common, or tornadoes or earthquakes, you can have insurance to help pay the cost of repairs to your home. Sometimes your home is totally wiped out, that's from a fire, and it will help you pay off your existing loan. It doesn't really get you back to square one, but it definitely a lot better than not having insurance. So that's that's the reasons why you have insurance is to minimize your financial liability. You're going to go through it enough if something bad happens, insurance helps you get through that.

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And there's many different types of insurance. And already covered auto insurance is insurance on your automobile. It's required by him

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Most lenders if you have a loan on your automobile, or it may be required from the state lease liability insurance, where if you cause damage to somebody else's property, then it will pay for that and just to make sure that you have the money, or the ability to pay the damage to somebody else's property, there's many terms involved in insurance, auto insurance, you got liability. It protects others in case you caused the damage. collision, protects your own car's value if you cause a wreck. Comprehensive, protects your car's value from weather damage that and other pearls, not cars on the highway. And an example of that would be if it's parked in your garage and your house burns down. Your homeowner insurance is not going to pay for the replacement of the car, but the comprehensive portion of your automobile

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insurance will pay for your car and other coverage.

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You can have medical coverage in case some ways in your car gets injured while you're driving and the they don't have insurance, he could get everything covered. That way. If you have a business, you need business insurance, that's definitely a required insurance to protect your inventory especially if you are borrowing money or having inventory on credit. Then you need to protect your inventory so that if it's lost through vandalism, fire whatever, then you can get a payment then you can pay the creditors for that inventory.

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homeowners insurance works pretty much the same. If you got a mortgage on your home, then you need to have insurance that mortgage company is going to require

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Because they want to protect their asset because your home is collateral to them. If you default on your mortgage, they're gonna foreclose on you take the home, kick you out, sell the home, get their money back, give you whatever's left over and everybody's happy.

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So instead of going through all that process, if you have insurance when something bad happens, such as fire,

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hurricanes, tornadoes, earthquakes, whatever depending on where you live,

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then they'll help pay off those creditors that help you get back started towards getting a new home. Now, depending on where you live for homeowners insurance, such as Florida or California, your typical homeowners insurance policy may not cover hurricanes may not cover an earthquake.

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So you'd have to have additional

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insurance to cover those events. And sometimes they kind of make it difficult. Instead of calling it hurricane insurance, they'll say, well, we don't pay for water damage, wind damage. Well, that's caused by Hurricane. So you have to have a policy that covers water damage and wind damage. For a earthquake, they may not cover

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nature, and it's a natural occurrence as nothing anybody can do control it. So you probably have to look for different writers in order to get some type of coverage. Same with fire insurance, if it's a forest fire and burns your home down, which is common in some state for home insurance, homeowners insurance, you have premiums, which is your yearly policy amount that you pay, and then you have deductibles. A deductible is the amount that you have to pay to fix the problem.

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Before the insurance company will kick in, and deductibles are big time with health insurance. We're going to cover that later. Now I'm going to go into insurance that's not necessarily required, but insurance that you should have or needed insurance. And we're going to start out with health insurance. Health insurance is if you have a job and may be provided by your employer,

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other than through your employer, you may buy it on your own but if you have an employer offer health insurance prior

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plan,

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you cannot go to the marketplace that government marketplace and buy it and get a credit or some type of discount. So you got to keep that in mind oil marketplace insurance for health insurance is you are working and your employer doesn't offer

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health insurance. Why do you need health insurance? Well, if you know the cost of medical,

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it's very expensive. And if for nothing else, if you just have that high deductible policy, and it covers your major medical so if you have a major life event such as a heart attack, or an accident where you're injured and you spent a lot of time in the hospital, and it can be very expensive, your health insurance will kick in and cover most of the expenses. Now, high deductible means what is a deductible, as well as the amount of money that you have to spend out of your own pocket in a given year before your insurance policy is going to start paying on your behalf.

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So that's a deductible a high deductible would be typically around $5,000

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So you mean Yeah, if you have a heart attack, you pay the first $5,000. And then the insurance company kicks in and pays whatever they're gonna pay. And it's the same premiums is what your yearly policy amount is or your regular payment amount. copay with health insurance means that when you go to the doctor, your primary care doctor,

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they may have you have a copay where you pay part for the visit may pay part of the visit.

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That's just so that you can help keep your premiums down. Some copay start at 10 bucks, I'm started 15. And if you go to a specialist, it might be $100 or $60. Or somewhere in those ranges. Specialist is going to cost you more on a copay and the general practitioner or your primary care doctor is going to cost you a lot less. Now the insurance companies have this thing going without

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The medical where you got to go to a primary care doctor and or to get referred to a specialist. So if you have a skin rash, you have to go see your primary care doctor. He looks and says, Yeah, you got a skin rash, but I don't know what it is. You need to go see a dermatologist, he refers you to a dermatologist. Then you go to the dermatologist and they say, yeah, take this, put this on there and it goes away, or cancer or whatever it is. It's just an example.

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Generally it payments.

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You give your insurance information to your provider at the time that you see your provider. Then they will bill your insurance company first. Last year copay. The insurance company will look at it figure out how much they're willing to pay, apply the deductible amount or whatever

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or whatever

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They're willing to pay for your region and make a payment. And if they pay part of it,

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say it's $1,000 and your copay is $10. So it's $990. And then the insurance company determines that for your area, that church should be $600. If they pay the $600, you do not have to pay the additional difference are the $390.

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Sometimes if they apply deductible, then you have to pay the difference, because the deductible is what you pay out of pocket first.

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Having my least major medical is peace of mind. It's knowing that you never know what's going to happen if you're young. This insurance should be fairly inexpensive. The older you get, the more likely you're going to have a claim, the more expensive it's got.

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have become

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if you're super poor, you have free coverage. It's called medic, k Mehta aid, Medicaid.

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And if you're older, it's Medicare, Medicaid. I don't I don't ever get those quite right but you got this look and see what they provide. Usually a provider will help you figure out the type of insurance you can claim if you don't have insurance. The another type of insurance you need to consider is life insurance. So if you're married, have children and your spouse doesn't work and pay your family is dependent on your income. Then you need life insurance in case something happens to you and your deceased. You have a policy that they can have. It may be a lump sum, say like $3 million,

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but they then they can put that aside and have money to do things like

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Pay off the house, pay off some debt, have money to live on for a while until they get,

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you know, wife goes to work or you know, something happens, you know life goes on. So that's you got Term Life Insurance, which is for a set period of time. That's the cheapest way to go. Says here in my article that it's usually for 10 2025 or 30 years. When the term runs out to cover its expires. I always thought term life insurance was year to year, you can get a year policy and every year it goes up a little bit. Again, the younger you are, the less it's going to be then you have whole life insurance that can last for the rest of your life. And it's also has a death benefit in there. What happens with whole life is has a death benefit you pay more and for whole life. It's invested over time you

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build up a cash value. And then this cash value you can borrow against and then repay if you want, don't really necessarily have to. And then when you pass away, it's got a set amount of death benefit. Or when you don't pass away and you have enough value in there, you start it say when you're 25 years old, when you're 65, that you can roll it over in some type of annuity and get a monthly payment out of it. That's what a whole life insurance, it's generally a whole lot more expensive than term insurance. So if you just look at

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to replace your income upon death, then term insurance is the way to go. If you're looking to use the insurance company to help you in your retirement years, you're not really planning on dying too young, which is an unknown, then the whole life, maybe a way to go

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This is where your insurance agent can help you identify those, you just got to do your research before you buy it, and know what you're getting into before you buy any type of life insurance, and I have life insurance for your children, for your spouse for everybody for every reason. And then we have Disability Insurance which I had that when I was self employed, when you're self employed, and your income is dependent on you doing all the work, and if you're unable to go to work in then you have zero income. You would need a disability insurance that kicks in after a period of time. You have short term disability and may kick in after two weeks or three weeks, and you have long term disability that kicks in after six months. That is designed to replace your income while you're still living. Say you get sick enough.

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Unable to go to work. That's what happened to me. I got leukemia. I was off work for seven months. Luckily I was a truck driver I wasn't self employed. If I was self employed as an accountant, I would probably lost my whole business. I lost all my income because I wasn't driving a truck. I didn't have any income after I think it was six months it kicked in and gave me a lump sum payout. Because they you know, they called me and said, Well, how long are you gonna be off work and I told them and and I said well, and they basically made a settlement with me, which was more than enough to pay all my expenses. You know, my normal expensive like my mortgage payment, my utilities and stuff like that, while I was off work, which really helped a lot kept me from losing my house. So that is the need of insurance. That is optional. If you think you need it.

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Or if there are certain situations you need it you should. Health insurance, I would say is almost required. Well, the government says is required but they don't enforce anything.

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At this time, even if you're young, and you're working in a situation, he should at least have health and disability insurance. If you have a family of any type and they're dependent on your income, then you definitely would need life insurance. Other insurance to consider is renter's insurance, pet insurance and travel insurance. Well, we'll start with travel. You only need travel insurance when you're traveling so you'd buy it right before you start traveling. Like this pandemic happens say you is traveling and you flew to Europe. And then this pen pandemic started and and your everything got canceled while you need money to get back to your starting point.

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Or back home? Well, this is where travel insurance would kick in, give you some money to so you could buy airfare to get back and help you get back to your home. That's what or if you're traveling to an area that could be dangerous. Personally, I would never do that but you never know. You have travel insurance to cover that. pet insurance. Well, first of all you need a pat, I think it's gonna pay is for your vet fees. I don't know how it really works. I'm assuming if the pet has some type of medical issue, it might cover parts of that. If there's some type of accident and might cover parts of that. And then you have renter's insurance, you don't own your home but you're renting a condo or apartment or even a home, your personal property. All the furniture and belongings you have in that home is not covered by that

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homeowners insurance because you don't own the property of the building. So you need a insurance as a renter to cover if there's a fire or water damage to cover your personal property, and that's what renter's insurance is, it's not really required.

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Depending on if I was living in older building that's prone to have breakage and water pipes, or bad wiring or something. Of course, if I know that it probably wouldn't live there, but just in case I had some type of renter's insurance. If I had more than a couple thousand dollars worth of personal property that would be closed furniture. And my show notes I have linked to two articles that I referenced types of insurance and start here insurance. You can go there to my show notes and see those articles and read them online.

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It's a lot of what I talked about. And if you would like to support the show, there's on my show notes at the bottom, there's a link where you can check out isotonic vitamins. I've been taking them for over five years, I rarely get sick, I highly recommend them. So check it out, and you don't have to buy them but just check it out. If you're interested, you can buy them. And I would appreciate that. Thank you. I'm going to end this episode talking about reducing debt, an overview of pass episodes. The reason why I do this podcast is to help people get their debt under control, and it's all about personal finances. First thing you need to do is have a personal finance plan. Set up what's your short term goals mid term goals long term goals may be identified.

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What you would like to do with your money, that's the starting point.

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Once you have that figured out step two is if you have a lot of credit card debt, come up with a debt reduction plan. Focus on how you're going to go about paying off those credit cards as quickly as possible. And I cover all this in previous episodes, but an overview, you would want to start out by making all the minimum payments. Don't be late on making your payments because that's going to affect your credit score. So you want to make your minimum payments on a setup a savings account number, the three counts you need to have is a checking account, a savings account, and a retirement account. Hopefully your employer has the retirement account set up for you. So you just need to make a contribution to that.

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If you have a retirement count through work, and you're not part of it, you're just throwing money away because the employer may be matching. That's money that you're just wasting, thrown away and not taken advantage of.

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How do you pay down your debt by only making the minimum payment? Well, you're gone to put all the excess money that you have for the month, and to that savings account, so you can start building up an emergency fund. The emergency fund is gonna allow you to have money available, so you don't have to use the credit cards. So you're gonna eliminate creating new debt.

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Step that's step one. Once you have eliminating creating new debt, you can start getting a debt under control. And as you will see that that ends

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Interest is gonna still be building up, but most of the minimum payments can at least cover the interest on most of these credit cards. So as your balance is gonna, at the very least stay the same, maybe go down a little bit as you get enough money built up and to your emergency fund that you think you might need.

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in case something bad happens such as your car break down or get behind on something else, you need a little extra cash to pay or if your income is a little bit down for one pay period to the next, you have enough money where you don't have to use a credit card once you have enough money in there, and then you need to keep building it up until you have

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excess money in there. Once you have one to $3,000 in excess, remember as long as it's in your savings account as part of your emergency fund. So if you

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Build it up for a longer period of time, get a larger amount in there, you have more of an emergency fund.

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At such point where you feel comfortable, take three or 4000 of it and apply it to a credit card to get it paid down faster. And you just keep doing that over and over and over until you get those credit cards paid off. And then you keep on doing that and you work on all your loans you have you start with your credit cards because that it generally has the highest rate of interest. You go to car payments, you go to your line of credit against your home, and you may go to a first mortgage, keep paying things off and work your way down. It's gonna snowball it's gonna keep building up as you go down. Think of a snowball very small at the top of the mountain. As it starts rolling down the hill it's getting bigger and bigger, bigger. The closer to the bottom the hill which is

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euro debt is getting big, bigger and bigger, and it's speeding up also. So it's gonna be a slow process first, and then over time is going to start speeding up, you're gonna start seeing results much faster and you're going to be much easier to get that debt under control.

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Then you need to have things such as life insurance, plan ahead.

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And that should be part of your personal finance plan, set your goals, reduce your debt,

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have things set up for planning ahead. Insurance could be one of them. savings is one of them. Long term investments is another one. That's all personal finances is all about that the only way you can do all that is to have a budget. And the reason you have a budget is to try to control your spending.

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And in my first or second or third episode, the easy way to do a budget is just make a list of everything you're paying

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for on a month to month basis, if you're something that's due every month, it needs to be in your budget. Keep those bills and receipts and whatever you're getting from those providers. Put that in your budget, categorize them by type such as utilities, groceries, you know, food, food and transportation, clothing, and other entertainment and categorize them and then look at it. If you find things in there that you're still paying for, but you're not really using you need to get get those cancel. And that's everything with a budget is all about is to track and keep control the flow of your money. And the more you can keep track of it, the more you can keep down your wasteful spending.

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on paying for things you no longer use and get that out of your life that's kind of give you a little more money that go down the road and you can still live your same lifestyle, you're just keeping up closer track of what you're spending money on, and keeping it all under control. So that's it for now. I hope you enjoy this episode. Go back and listen and review some of the past episodes, you may pick up some information. That's the end of another episode. I hope you found it useful. And if you'd like to share this episode with your friends, please do so. I'm open for any suggestions for improvement or for information that you would like to talk about in future episodes. You can go to my Facebook page and leave me a message more than glad to comply. To find my Facebook page go to reduce debt increase wealth.com and click that

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On the Facebook icon to go to my Facebook website