This Week In Your Wallet: How To Protect Your Financial Life
It seems appropriate — on Groundhog’s Day — to remember that wonderful run of scenes from the Bill Murray flick where he tried, unsuccessfully, to put a stop to the endless loop that had become his life. He stepped in front of a truck. Took a toaster into the tub. And my favorite: Drove himself and Punxsutawney Phil off a cliff (“Don’t drive angry,” he instructed the rodent. “Don’t drive angry!”)
Disasters all. The sort of disasters that could blow your whole financial life up in one fell swoop – or, as Professor McGonagall said so aptly to Neville Longbottom, “BOOM!”
For the past month on our #startTODAY series, we talked about earning more, saving more and investing what you’ve saved. This week we dealt with the important steps everyone needs to take to put a basic, financial protection plan in place. Among them:
- Emergency Cushion: You need one, even if it only has a couple thousand in it. It’s your very first layer of defense, because it can bail you out in a jam. A plus? The average tax refund is about $3,000. Take that, put it into a separate savings account, and boom – instant emergency cushion.
- Life Insurance: If you have other people — a spouse, children, or older parents — who depend on your income and would be hurting without it, you need life insurance. What you want is generally a 20-year level term policy. Note: Term life is just insurance — if you die, it pays — without any other investment bells and whistles attached. How much do you need? On my website, I’ve got a free life insurance calculator. If you’re not up for running through the calendar, buying eight times your income is a fairly decent rule of thumb.
- Will: The easiest way to get a will these days is to use an online resource like WillMaker, which is $55 through Nolo.com, or LegalZoom.com, where do-it-yourself (online) wills start at $69. (Just make sure it’s properly witnessed.) If you’re up for spending a little more, you can have a will prepared by an attorney starting at about $500. While you’re at it, get durable powers of attorney for healthcare and finance, as well.
Make The Car Dealer Your BFF
Americans may love their cars, but research shows we pretty much hate buying them. Surveys from both Accenture and AutoTrader reveal that, given the choice, most consumers would take the entire transaction online so that they don’t have to deal with, yup, a car salesperson. You can go that route if you’d like (these days, even test drives can be set up via a dealership’s Internet sales department). But you can also approach the salesperson with a new perspective. Edmunds reports that getting the salesperson on your side can save you money.
For example, tell the salesperson up front when you plan to buy the car, whether it’s today or six months from now. Saying you plan to purchase the car immediately can make you a high-priority customer, getting you better offers and services. And if you’ve got bad credit, tell the salesperson immediately – it can save you both time looking at cars you wouldn’t be approved for – and free up the salesperson to find you a prospect you’ll be happy with and can actually buy. And finally, if the deal’s already done, don’t be afraid to ask for the salesperson to throw in something extra, like a free oil change or two. If the car or the deal isn’t for you, be honest and say so (it helps you avoid countless follow-up calls and emails). For more tips, head here.
April Showers Bring Great Prices On Auto Supplies
Looking for the best time to buy a winter coat or a laptop? MONEY has got you covered with a month-by-month guide on the best time to buy just about anything. If you have a penchant for home decorating, for example, then this is your month to buy furniture, appliances and other housewares on sale.
Sale prices on spring clothing, as well as garden and auto supplies, peak in April, while summer clothes and laptops are best to hold off buying until August. Wait until November to purchase consumer electronics and video games, and for toys and gift cards, December is, conveniently, the best month.
A Good Offense Is The Best Defense
Tax-return fraud – where scam artists file a tax return using your Social Security number in an attempt to capture your refund before you do – is a growing problem in the U.S., reports CNBC. In 2013, $5.8 billion in refund dollars were paid to folks other than their rightful owners (though the IRS did catch $24.2 billion in fraudulent claims before they paid them). So, how should you best protect yourself?
Get all of your documents — like your W-2s, 1099s and other records — together as soon as possible, and file as early as you can. (The deadline this year is April 18.) Be on the lookout for signs of fraud, like fake emails and voicemails from someone posing as the IRS — these scams can get very intricate, so if you’re worried the IRS has contacted you, initiate contact with the IRS via mail or phone. (FYI: The IRS will not call you at home. Their first form of contact is a letter in the old-fashioned mail.) Another thing to look out for? Keeping your information safe when it’s in transit. At this time of year, a lot of sensitive data is on the move, and it’s important to use an online file-sharing service with heavy security features — like Hightail or Box — when sending documents electronically.
Have a great week,
Jean
