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If you are single do you need to invest in life insurance?

Life insurance is a very important acquisition as it allows you to provide for the people left behind after you die. In the vast majority of cases this means your dependents such as a partner and any children you may have.

Life insurance is normally intended to help these dependents meet the financial burdens of life when they no longer have the benefit of your income. These burdens can include the payment of a mortgage, or the cost of education. If you don’t have any dependents then is it really necessary to have life insurance?

If you are single, how does life insurance apply to you?

Firstly, it’s about more than just being single. You can be single and still have children who you want to provide for if you die. It’s also about the costs involved. In the majority of cases if you are single and have no dependents then the only thing you really have to be concerned about is the cost of your funeral. You may want to consider the benefits of a funeral pre-payment plan. It should be noted that these plans do have some risks attached to them and you also have the option of approaching your bank to set up a fund to pay for your funeral expenses.

What if you’re only young and you don’t know what the future may bring?

No-one really knows what is just around the corner; you may be single with no dependents today but that situation can change very quickly. Is it worth taking out a life insurance policy while you are young and healthy, just in case? It’s certainly true that life insurance premiums are cheaper when you are young and in good health but even so is it really worth paying out for life insurance when there is no-one to benefit, probably not.

When should you think about life insurance?

As soon as you have dependents to provide for, and a mortgage to pay, then it’s a good idea to purchase HBF life insurance. Once you have a policy in place then you no longer have to worry about what will happen should you die. You just need to make sure that you are insured for enough value to make sure that the mortgage can be paid off, and that the ongoing costs of raising your children can be met. This means that your family will at least have some financial stability whilst they are dealing with the emotional trauma of losing you.

It’s likely that you will need to purchase term life insurance which is normally suited to younger people in good health. You can take out the policy for a set number of years and if you die within that period then your family is paid a lump sum. In most cases this time period is long enough for your children to have grown up and for your mortgage to be mostly paid off. After these two things happen it may no longer be necessary to have a life insurance policy, depending on what other expenses will exist if you die.


Stock Buybacks are Booming!

Published on August 26, 2014, by in Personal Finance.

After faltering for a couple of months, buyback announcements from many major US companies shot up to a three month high recently, putting 2014 on track to be one of the biggest years ever for buybacks. Companies from 21st Century Fox Inc. to several airlines and many other businesses continue to buy back shares of their own stocks, even though they’re being criticized by many analysts for doing so.  Here are 3 reasons why buybacks have become so popular in the last decade or so.

First of all, this is what they call “financial engineering”. When a company has earnings that aren’t doing so well, they can actually maintain and even boost their earnings per share by repurchasing those shares. What this does is shrink the denominator/shares outstanding, and many businesses have realized that it’s an excellent way for them to bolster their per-share earnings and sustain any momentum that their stock might have.

Second, businesses have realized that buybacks are a great way to return money to shareholders. While some are quick to criticize companies for buying back their shares instead of investing in things like new equipment or hiring better people, that criticism is a akin to criticizing them for paying dividend payments. The fact is, buybacks are just another way to distribute corporate profits to shareholders and, since it avoids double-taxation, it’s seen as a better way to do it as well.

Finally, many businesses have realized that buybacks are an excellent way to offset employees who cash in. While there is certainly criticism of companies that ramp up buybacks after their stocks have climbed, what most of these critics simply don’t understand is the need for these companies to “buy high” in order to offset employees cashing in. The fact is, when stock prices go higher, employees begin exercising their in-the-money stock options and, when they drop, the same employees hold back from exercising these options.

So far in 2013 businesses have announced about $300 billion worth of buybacks, and July saw $55 billion, the highest amount since April. What this means is that, even though buybacks are still extremely popular, it’s unlikely that they’re going to top the $669 billion total of 2013 or the all-time record that was reached in 2007.

Nevertheless, buybacks are more and more an option that companies are using in order to maintain their earnings, pay shareholders and offset employee cash-ins. Whether or not analysts like them, they certainly will continue to happen into the future.


Terms you need to Know in order to Understand Financial Risk

Published on August 20, 2014, by in Personal Finance.

When it comes to investing there are a lot of terms that you really need to know in order to be able to make educated decisions. Many of those terms deal with the financial risk that you take when investing, and knowing those terms is vitally important to your success. Below you’ll find the most important financial risk terms that you need to know. Enjoy.

Probably the most important term is Market Risk or what’s known as “principal risk”. This term refers to the chance that a downturn in the market, or a bad investment, lowers the value of any asset you might have. It’s used mostly for stocks and bonds.

At the other end of the spectrum from market risk is Risk of Avoiding Risk. This usually applies to investors who are too conservative and whose investments don’t grow fast enough to keep up with inflation.

Many consumers seek the elusive risk-free return by putting their money into CDs. The problem with this is Interest Rate Risk, which you face if your assets get stuck at a below average rate of return because interest rates have risen.

One term that applies to an individual more than the market is Shortfall Risk, the risk that an investor won’t have enough money to make their goals. Being too conservative or, on the other hand, too aggressive, can open an investor up to shortfall risk. For consumer that doesn’t believe their portfolio is strong enough, saving more is the key to addressing shortfall risk.

A similar term is Special Situation Risk, which applies to an individual investor with special needs like a wedding, home purchase or college costs. A couple that is so worried about paying college for their child that it distracts them from saving for their own retirement, for example, is suffering from special situation risk.

Timing Risk is similar to special situation risk in that it depends on the individual investor as well as the specific timing that they’ll need to keep up with in order to have enough money by the time a specific event occurs. For example, if an investor is going to be purchasing a home in four years but it doesn’t appear that their stocks will make enough money to enable them to do that, their timing risk is high.

If government decisions could possibly damage the value of any of your investments or assets, you have Political Risk. Obamacare, tax law changes and changes to Social Security are all specific political risks in that all of them may negatively affect your investments.

Looking at everything from a “big picture” perspective, Societal Risk is the risk that your assets and investments face due to world events like terrorist attacks, wars and natural disasters.

Unless you’re a complete newb  investor, you should already know that Diversification is one of the best ways, if not the best way, to lower your risk from any of the factors above. Diversification means simply spreading your money around in different assets and asset classes so that, if one were to falter or fail, the others will still continue to grow, keeping you from losing everything.


Payday lenders find an unlikely supporter in Archbishop Welby!

Published on July 28, 2014, by in Personal Finance.

Now the tables have been turned on Archbishop Welby, one of the sternest critics of payday lenders as he is forced to make a u-turn on his position that payday lenders should be forced out of business. This blog will examine the comments of the Archbishop and explain why he has now changed his mind and come out in SUPPORT of payday lending!


Wonga – a plague to modern society, or a helping hand in troubled times?

It is a rare occurrence that a member of the clergy is moved enough about private enterprise issues that he makes a public statement on the subject. However, so controversial is the subject of payday lending that Archbishop Welby, a senior figure in the Church of England made a series of statements on the subject. His position was that payday lenders like like Wonga should be forced out of business and that they contributed to spiralling debt and as such were a something of a modern plague! He felt that poor people were being taken advantage of and should have greater protections in place against lenders who charge high interest rates.


However, like many who weigh into the debates on payday lending, the Archbishop did not have all of his facts straight and he has now been forced to re-consider his position and retract his earlier statements, in favour of a more balanced approach which takes account of some of the advantages of using payday lenders, including the fact that although payday lenders can charge high interest rates, they provide a valuable service which keeps people from having to approach loan sharks who collect their repayments with violence and baseball bats.


Using payday lenders keeps people out of the hands of loan sharks

The Archbishop has now stated that forcing payday lenders out of business – something he advocated initially would have the consequence of forcing people into the hands of loan sharks who operate illegally. Research has indeed shown that the operation of loan sharks is on the rise.


The change of position has been welcomes by the payday lending sector who feel they have been demonised and unfairly picked on as the cause of social problems like poverty and social problems related to poverty. However, what is obvious is that spiralling poverty in the UK is a more complex issue than one that can merely be attributed to the use of payday lenders. Increasing taxation, public spending cuts and the decline in funding for essential services like the NHS and foodbanks are more relevant to the issue of rising poverty in the UK.


Hidden benefits of payday lenders

Payday lending, in fact has a number of hidden benefits for the poor which are rarely acknowledged, but which have been highlighted by the change of tune the Archbishop adopted recently on the subject of payday loans.


Take the subject of food poverty. Payday loans help reduce and alleviate the consequences of food poverty. Food poverty is on the rise in the UK and it means a situation where a household is so stretched financially that there is not enough food in the house to provide basic nutrition to growing children and poor families. Dozens of payday loans are used to provide food for hungry children whose parents do not have to wait until payday for the money to provide basic nutrition to their children, thanks to the services payday lenders provide. In most cases the short term loans are repaid within weeks so families experiencing food poverty are grateful for the assistance they can provide in an emergency.


Don’t criticise without thinking, why not ask users of payday lending services what they think?

Fuel poverty is another issue, which the services of payday lenders can help alleviate. Fuel poverty, like food poverty, too in on the rise in the UK. It is where families and households across the UK are so stretched financially that they are forced to switch off the heat to save money. When there are freezing conditions and cold temperatures, despite ongoing fuel poverty, you can’t turn to the government for immediate assistance – the best they can do in most situations like this is give you a form to fill out, but what help is this when you want to put money on the gas meter? Payday lenders provide a useful service for struggling families in cases of financial emergencies, which mean that – no questions asked – money is made available so basics like heat and fuel can be purchased immediately. You might even say that the government should subsidise payday lenders, until they can effectively address food and fuel poverty. If you as poor people, they would agree!


Why not get involved in today’s debate? Post here


Planning for Retirement

Published on July 10, 2014, by in Retirement.

There are many different definitions of the “American Dream”, some say it’s a great job and nice house, others say it’s comfortably raising a family, yet my definition varies a bit from those. To me, the American Dream is about affording a comfortable retirement after hitting all of those milestones above. Owning a home is nice, and raising a family is paramount, but it’s your financial health after those achievements that truly matters most. Nobody wants to work forever, I know I certainly don’t, so saving and spending wisely from a young age is very important. Regardless of your income bracket it is clear that today’s generation is severely unprepared for retirement. In order to properly prepare for retirement please heed my suggestions below.

Take advantage of every retirement account you can! This means that if your employer offers a 401k plan with matching funds, then you better contribute enough to receive the full match. If you are able to max out your 401k that is even better. I’ve seen people that fail to contribute to their 401k plan and lose out on the employer match, this is like throwing away free money. If your employer offered you a raise today would you say no? If do you contribute to a 401k then don’t stop there. There are plenty of other IRA accounts (SEP, Traditional, Roth) that you may qualify for as well. The best part about these accounts is that each one offers some sort of tax advantage. Remember, the earlier you start the better off you will be. The power of compound interest can take a little bit of money and turn it into a lot.

While tax advantaged accounts are the next best thing to sliced bread, they aren’t the end all be all of retirement savings. After maxing out my 401k and IRA options, I opened up an online brokerage account that I fund with after-tax dollars. This allows me to aggressively save and invest for my medium term plans, rather than just for my long term retirement savings. Here you can engage in blue chip stocks or even index funds. My theory on these accounts is that they can be liquidated much easier than a retirement account, and they offer more aggressive savings options of a typical bank account. Don’t forget, you don’t want inflation eating up your savings either.


Do What You Love, Love What You Do

Published on June 11, 2014, by in Personal Finance.

Do you have a favorite hobby or pastime? If not then you need to find one quick! There are many studies that shown taking up a hobby can ease stress, improve health, and just give one a sense of overall purpose. It’s probably no secret that one of my favorite hobbies is blogging. I spend time each week carefully planning out content that I want to write, social interactions and forming relationships with other bloggers, and of course the technical upkeep that comes along with any website. What makes me fortunate is that this hobby is also a nice side hustle that provides a little extra income for my time contributions. That doesn’t mean that all of my stress relieving hobbies come with a price tag though. In fact, I have several that cost me quite a few bucks, and might raise an eyebrow considering I’m a personal finance enthusiast. Just remember you can’t put a price tag on your health and enjoyment of life.

I love going to baseball games! I absolutely love the game of baseball, and the closest place for me to go and watch a professional game is about an hour from my house, which means lots of gas and miles on my car. Then once you get there you have to pay additional money for parking, food, drinking, and just about anything else other than breathing in the air.

Another favorite hobby of mine is gaming! While I am fortunate enough to have some brick and mortar casinos relatively close to me, they come with the same added annoyances as I described above. That’s why online establishments like 888casino are becoming more and more popular. You can avoid the time, money, and hassle that accompanies a crowded casino floor, all while enjoying your favorite games.

Going to the movies, or even renting a movie, has become one of my favorite things to do. With companies like Netflix you can pay a few measly dollars a month and have access to thousands of hours of entertainment available to you. As much as I enjoy going to the show, unless it’s a matinee price, it can be very expensive…especially for a family of four! Staying home, buying snacks, and watching a movie online is the way go!
Regardless of our stress relieving hobby, just know that there is always a more affordable way of going about it!



Retiring soon? Do these things in the 5 years leading up to it and you’ll be much better off

Published on May 29, 2014, by in Retirement.

It used to be that retirement was a fixed age point but, in the last couple of decades, that has changed and many people now retire over a longer period of time and many don’t retire completely.

Analysts these days have coined a new phrase, the “retirement red zone”, which is the five years before someone’s full retirement starts. In these five years leading up to quitting your job completely, there are certain things that you can do to get ready and make preparations so that, once that weekly paycheck isn’t coming in anymore, you’ll be sent to handle it.

The first thing that should be done, and as soon as possible, is to create a financial plan and learn how to budget as well. The value of learning how to budget and having a plan is enormous and will help you to see where you are financially as well as give you an idea of where you need to be.  This will obviously help you to see if you’re on the right track to getting there in the next five years. It will also answer the all-important question “can I afford to retire?”

Next is lining up a number of different retirement income sources. One of them will be your Social Security checks but you’d be very wise to not rely on them entirely. Anything you can do to monetize your skills and set up residual income streams now is an excellent idea and will help to pad your income during retirement.

Another is simply to maximize your 401(k), if you have one through your employer, and take full advantage of any matching program that they might have. Keep in mind that there are “catch-up” provisions that you can take advantage of as well and don’t leave any valuable retirement money on the table. In most cases you can contribution up to $5500 more using this one provision if you are 50 years old or older.

If you plan on retiring before you hit 65 you need to keep in mind that you won’t be eligible for Medicare and thus make sure that your health insurance is paid in full and any health care plan that you have through your work will continue to cover you during retirement. After 65 Medicare will be your primary insurer if you had an employer plan and your company might pick up some of the costs, but not always, so definitely check to be sure.

Remember also that Medicare, unfortunately, does not cover long-term care costs and be sure to have a strategy to take care of those if necessary. Considering that one out of two people will need some type of long-term care costs in their lifetime, having long-term care insurance is a very good idea. The fact is, healthcare costs usually increase towards the end of your retirement, which also happens to coincide with the end of your life, and you really need to be prepared for this as much as possible in order to not burden your family with the stress of huge health care bills.

Finally and most importantly you should do your best to pay off your debt before you retire. The unfortunate fact is that over half of all American workers are now going into retirement with debt, including mortgage debt on their homes. Credit cards and auto loans are also high on the list and, if you have an overly large amount of debt, paying it down now is vitally important.

Do these things in the years before you retire and you’ll find that you have a lot less stress, and fewer financial problems, once you get there.


Financial Aid Tips for the Uninitiated

Published on April 30, 2014, by in Personal Finance.

If you’re the parent of a child in high school that is rapidly approaching college age, chances are that you’ve just been introduced to the “numbers game” that is financial aid.

Colleges across the country issue their financial aid awards just after acceptance letters are sent out and, while the numbers might look rather impressive, the award letters can sometimes be confusing. Even worse, if interpreted the wrong way you might make a  mistake that could  cost you thousands of dollars.

For example, from the look of some financial aid letters some colleges mix up their loans and grants in what looks to be quite a random fashion. Others fail to clearly identify the student loans as actual loans or make it look as if they are giving away “free money”. Some colleges forget to mention the cost of expensive college extras like textbooks, which can be obviously problematic.

“Fundamentally, award letters aren’t really a counseling tool. They are marketing documents,” said Mark Kantrowitz, senior vice president and publisher of Edvisors Network. “Their goal is to show you how you can afford the school, even if you really can’t.”  Kantrowitz added that, even though 2000 colleges around the country have adopted a common format when it comes to financial aid award letters, the majority of colleges in the United States have not.

“There is no standardization because if you could easily compare, you could realize which school is more affordable,” Kantrowitz said.

In 2007/2008, the last year that figures are available, over 50% of all students received some type of financial aid, averaging approximately $4900, no small amount of money. That’s according to the National Center for Education Statistics and, for students at private four-year colleges, the average was over $10,000. Additionally, almost 40% of students received an average loan of $7100 and, at four-year colleges, $9100.

Keeping these numbers in mind, below are a number of steps that you can use when comparing financial aid so that you know exactly what you’re getting into and can make an accurate comparison.

The first and most important is to not make the mistake of seeing these financial aid loans as “free money”. Many colleges subtract both loans and grants from their total cost and present that as their net cost, but Kantrowitz says to include these loans in what you will eventually have to pay back.

“Only in the parlance of financial aid is a loan characterized as reducing your costs,” he said. “Imagine going to a car dealer and having them say ‘that car is free because you have zero down.”

When it comes to grants however, that’s another story completely. “There is no better price than free,” said Martha Holler, a senior vice president at Sallie Mae.

She’s correct of course but cautions that, when calculating the four-year cost of college, a parent make sure to know whether the grant their child is receiving will be available for 1 or 2 years as well as whether the grant itself is based on things like grade-point averages, sports participation or the choice of their child’s major.

Holler went on to say that  “you may see a one-year grant for $2,500, but a four-year grant for $1,000 annually”, and noted that this would be a better deal (obviously) that might be overlooked when comparing student loan forms and figures.

If you’d like to compare average grants to beginning students as well as to students at a particular college, you can go to collegenavigator.gov for help.

Finally, be sure not to let the “sticker price” throw you off. While some private four-year colleges will indeed have much higher stated costs, they may also have a lot more aid to grant and, according to Holler, “Sometimes it’s that more expensive school that costs you less out of pocket.”


Money Explained in this Infographic

Published on April 23, 2014, by in Personal Finance.

The definition of money, and the answer to why we value it so much is presented informatively below. From its early forms and existence, to the its evolution over the years, you might be surprised by some of the monetary facts laid out. Sometimes reading article after article can be both tedious and cumbersome, which is exactly why a graphical representation can be a nice change of pace. Please see the infographic below and dont forget to visit BuddyLoans Blog for more unique and interesting content.

Lets Talk About Money and Why We Value It

courtesy of BuddyLoans.com




Does Fracking cause Earthquakes?

Published on April 23, 2014, by in Personal Finance.

Instead of the usual financial blog today were going to get a little bit crazy with some breaking news about fracking, the relatively new approach to mining natural gas, and its possible link to earthquakes.  (When we’re done you may be wishing that we‘d given you a financial blog instead.)

In Ohio, geologists have for the first time linked fracking in the Appalachian Mountains to earthquakes, something that is at once terrifying and unsurprising that the same time. It’s also led to new, stricter conditions for companies to get permits in one of the areas of the country where the laws are already quite strict.

In March an investigation by the state that concluded that five small tremors in the Youngstown area of Ohio, which lies in the Appalachian foothills, were caused by the increased pressure due to the high pressure injection of sand and water that accompanies something called “hydraulic fracturing” or “fracking” for short.

Rick Simmers, the state oil – chief for Ohio, called the link between this newish form of drilling and the small tremors “probable”.

This is the first time that fracking has been directly linked to earthquake tremors and, even though they couldn’t be felt by people living in the area, it was concluded that the five seismic events that happened in March of this year were all part of a single, larger event.

This this was confirmed by the Glenda Ostman, a seismologist with the US Department of the Interior, and makes it the first time that a connection between the extraction of oil and gas (as opposed to wastewater disposal) and earthquakes has been made. At the same time it was found that a series of quakes in the same region back in 2012 were likely caused by a deep injection well involved in the same type of natural gas extraction activities.

James Zehringer, director of Ohio’s natural resources department, said that “While we can never be 100 percent sure that drilling activities are connected to a seismic event, caution dictates that we take these new steps to protect human health, safety and the environment.”

The scarier factor behind all of this is that, over the last several years, energy companies have been drilling literally thousands of what they call “unconventional” gas wells in and around Pennsylvania, West Virginia and Ohio, an area of the country with an abundance of Marcellus Shale.

The fact that Marcellus shale is one of the richest natural gas reserves in the entire world, and that drillers of only recently begun to tap deeper into it, has many people in the Northeast concerned that one day fracking won’t just lead to tremors but to an actual, full-blown earthquake.

And now we  return your back to your regularly scheduled personal finance blogs.


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