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The question of whether a car is an asset or a liability has been debated for decades.
The reason for the debate is that there are many types of cars in the world and each car serves different purposes.
In the past, many people bought cars that were used and old to save money, because they believed it was cheaper in the long run than purchasing new ones every few years. This mindset shifted after some studies showed that replacing your car more often actually costs you less over time in terms of maintenance cost and depreciation on your vehicle value when compared to keeping a newer model longer.
Nowadays, most consumers are aware that the car is an asset and are more willing to pay for a new one.
However, there is a huge caveat on how you purchase the car, the age of the car, and the purposes of the vehicle.
All in all, depreciation can eat into your car’s worth.
What’s your take on this debate?
What is Considered an Asset?
The definition of an asset is broad and includes most things that have value. Assets are tangible or intangible property such as land, buildings, equipment, intellectual property such as patents and trademarks, or stocks.
This can be anything from a physical asset such as a house or equipment, to a more intangible asset such as a strong brand name or a loyal customer base.
Is a car an asset or liability?
A car is an asset to its owner because it took money to buy the vehicle. It is also a liability in that the cost of maintaining the car can be high, and depreciation on a new vehicle can eat into a person’s savings.
There is no definitive answer as to whether a car is an asset or a liability. It depends on the specific situation and the person’s circumstances.
For example, if someone needs a car to get to work, then the car would be considered an asset. However, if someone only uses their car for recreational activities, then the car would be viewed as a liability.
On the whole, cars are considered liabilities. They require regular maintenance, insurance, and other associated costs. However, there are a few exceptions. For instance, in some cases, a car can be used as collateral for a loan or as an investment vehicle.
Is a Car a Depreciating Asset?
A car is a depreciating asset because its value decreases over time. The depreciation of a car is based on a number of factors such as the age of the car, the make and model of the car, the condition of the car, and the miles on the car.
Cars are assets, but not smart investments as they will depreciate over time.
Reason # 1 – Wear and tear
Cars require a great deal of care and maintenance in order to keep them running smoothly. This includes everything from regular oil changes and tune-ups, to replacing worn-out parts and fixing dents and scratches.
In addition, cars depreciate in value over time due to normal wear and tear.
Reason # 2- Higher Mileage
The value of a mile decreases the more it is used. This is because the value of something depends on its rarity and when something becomes common, its value decreases.
The average car is only good for 200,000 miles. This is because of both the increased mileage and the cost of repairs as a car gets older.
Reason # 3- Cars become obsolete
Cars are becoming obsolete because new models and makes are constantly being released. This means that people want the newest and latest model, so they trade in their old car for a newer one.
Plus many of the parts for older cars become harder and harder to find. Thus, causing the cost to repair to escalate.
Reason # 4- Cars are not investments
Some people may argue if a house is an investment as well.
When you think of an investment, you want a certain rate of return on your money.
Most people use the stock market as a benchmark of earning 8% of the initial outlay of money. Thus, a car is an investment that depreciates over time. It will lose value as it gets older and the parts wear out.
If you want a return on your money, you should be asking is now a good time to buy stocks?
Can a Car Appreciate?
Yes, vintage cars and luxury sports cars have always been the exception. There are select vehicles that are in pristine condition with little to no mileage. These collector cars have a special fan base willing to spend money on these appreciating collections.
However, for the average car, the answer has always been a resounding NO!
Well, that was up until 2020, when used vehicles started to increase in value due to lack of microchips availability has been scarce causing the production of new cars to be halted. Thus, the supply and demand for new cars have been skewed causing an increase in car worth.
As the supply chain gets back to normal production, this appreciation in our sedans, trucks, and SUVs will be short-lived.
How To Calculate Car Value
Car value is the estimated worth of a car. There are two main methods for calculating this:
The trade-in method, which takes your vehicle’s current market value and divides it by its estimated remaining life span.
The resale method takes your vehicle’s current market price and then subtracts the depreciation rate from that value to get a car’s market value.
To calculate the value of a car, you need to know its make, model, year, and condition.
Personally, I like finding the worth of a car based on its Kelley Blue Book (KBB) value. This is the resource my dad used when he worked in the car industry, so I can trust the information.
The KBB value is updated monthly and takes into account recent sales and modifications.
When it comes time to buy, sell, or trade-in your car, you’ll need to know a fair price.
You can use a variety of methods to calculate your car’s worth, including using online tools, checking with dealerships and other buyers in your area, and looking at recent sales data. Remember to factor in your car’s condition and mileage when calculating its worth–prices will vary depending on the location and condition of your car.
Car Value Deprecation Curve
Before you head out and purchase your car, car value depreciation is a real consideration in your decision.
As KBB states, the first year of owning a brand new car will depreciate the most. While it feels great to drive off the lot in a brand new SUV, you can watch hundred dollar bills float behind you with how quickly the car depreciates.
To calculate the depreciation of a car, it varies depending on the make and model.
However, here is a car value depreciation chart to estimate based on.
In year one, most models will depreciate at least 20% or more.
From years 2-4, the car depreciates about 10% each year.
After five years, a car will depreciate about 60% of the original purchase price.
Car Value Deprecation Curve Example
For example, let’s take the average price of a new car of $47,077 according to Car and Driver.
1st year = car lost $9415.40 in value and is now worth $37,661.
2nd year = car lost another $3,766 in value and is now worth $33,895.
3rd year = car lost another $3,389 in value and is now worth $30,505.
4th year = car lost another $3,050 in value and is now worth $27,464.
After 5th year, the car has lost an estimated $28,246 in value and is now worth about $18,830
That is the reason most people do not believe a car is an asset.
That is a depreciating asset. Would you consider an investment if you knew 60% would be wiped away in less than five years? Probably not.
This is why most thrifty people look for cars that are at least 5 years old and lost most of the depreciation. Personally, I have never purchased a new car; everything I owned was new-to-me used vehicle. Even growing up as a daughter of a car salesman and manager, my parents never purchased a brand new car due to deprecation.
Another reason beater cars are super popular!
How Your Car Is An Asset
There are a variety of ways to define what an asset is, and whether or not a car falls into that category depends on the definition used.
In general, most people would say that a car is an asset because it has value and can be sold for money.
However, there are other definitions of assets that may not include cars. For example, some people might say that an asset is something that generates income or increases in price.
A car can be an asset for someone who is making money off of it. For instance, an Uber driver uses his or her car as a business asset. The car is providing them with income, and thus it can be considered an asset.
On the other hand, most people use their vehicles for personal use as a mode of transportation and do not make money off of it. If your car was purchased with cash or paid off, then you can consider it an asset.
Is a paid off car an asset? Yes.
Why is a car not an asset?
A car is not an asset because it depreciates in value the moment you drive it off the dealership lot. While it may be a necessary expense, it is not an asset that increases in worth over time.
Is a leased car an asset?
No, a leased car is not an asset because the asset (car in this case) is the asset of the leasing company. This is 100% liability for you and a monthly payment which you must make.
Leasing a vehicle allows you to drive it for the length of your lease term without the risk of buying and then selling or trading in at the end of your lease. Once the lease expires and if you decide to purchase the car, then it would be considered an asset on your net worth.
How Your Car Is Considered A Liability
The car is considered a liability if the debt exceeds the car’s value.
Simply put… If you have an auto loan, your car would be considered a liability.
Given that most people believe car loans are a part of being an adult, many view cars as a liability and monthly payments normal.
In addition, a car is a liability because, like any other depreciating asset, it will lose its value over time.
The longer you own it, the more money you will likely have to spend on repairs and general upkeep. This means that your car is not only costing you money every month in terms of payments and insurance, but also in terms of the decreasing worth of the asset itself.
Is a car loan an asset?
A car loan is a type of debt that is incurred when borrowing money to buy a new or used car. Thus, the car loans are considered liabilities and the car itself would be considered collateral.
Should I Include My Car in My Net Worth Calculation?
The answer to this question depends on how much your car is worth.
Personally, at Money Bliss, we recommend counting the vehicle as an asset and any auto loan as a liability. That means you would include both in your net worth calculations.
The reason why to include in net worth is if you had to sell your car immediately, you would be in one of two situations:
You have instant access to cash if needed.
You owe more in your car loan and thus, have negative equity. Meaning you would have to pay additional money to get out of your car loan and sell your car.
To keep your net worth accurate, you should adjust the price of your vehicles as they decrease over time.
Is Having a Car the worst investment of your Money?
There are a lot of factors to consider when answering this question.
Owning a car can be a major expense, and there are a lot of costs that come with owning a car, such as insurance, registration, and maintenance. However, a car can also provide a lot of benefits, such as convenience, freedom, and security.
Ultimately, it depends on your individual circumstances.
Know someone else that needs this, too? Then, please share!!
Today, I have an inspiring story from a blogger. Cassie paid off $10,000 in debt in 10 weeks and shows how you can make this a reality too. Enjoy!
In September of 2015, my wife and I officially tied the knot and, as perfect as it all was, when we returned to our home after our honeymoon we had to take a serious look at our finances. What we found shocked us.
We had known from the get-go that we both had student debt. We both attended a private, Christian college where we met and we both continued on to receive our master’s degrees. While we knew we had student debt, we had always assumed that we would simply pay the minimum until it was gone and that would be that.
What did we find when we did the math? It turns out that my wife and I owe a grand total of almost $200,000 in debt (OUCH!). Even worse? The minimum payments don’t even begin to cover the interest which means that no matter how many payments we make, we will never escape from this debt’s grasp.
Unless…
One of my favorite Dr. Seuss quotes comes from the Lorax, “Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”
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Now, I know that this quote is referring to saving the world, but I think it’s applicable to paying off debt too. Debt can be all-consuming and debilitating, but unless you care about fixing it, it’s not going to get any better.
The thing with debt is that unless you truly work toward eliminating the problem, the problem is not going to go away. It’s certainly not an easy-fix sort of thing. Unless you truly care about getting the weight of debt off your shoulders, you’ll be trapped.
My wife and I do care about paying off our debt because we realize how much it is holding us back – we are unable to afford a house, put money into retirement, or start a family.
That’s why we made the decision to begin aggressively paying off our debt. Do you know what happened when we made that decision? We began crushing the debt that had been, only recently, crushing us.
In our first ten weeks of debt repayment, we paid off a whopping total of almost $10,000! How did we do it? Well, it’s simple: create a budget and a plan, develop a side income, and learn how to live frugally.
Related tip: Check your credit score with Credit Sesame for free!
Creating a Budget & a Plan
Developing a budget was the first step. My wife and I spent an entire month simply monitoring our spending without changing our habits. Why did we do this? Well, we wanted to see where our money was going.
What we realized is that our money was going everywhere. We were spending outrageous amounts of money for things that we didn’t even realize we were getting! Sure, some of it was important (food, certain bills, etc.), but there was so much that was unnecessary. The couple of dollars here and there for snacks and beverages (when we have these at home), the fast food or restaurants in place of dinner at home, or the subscriptions that we had forgotten we had that were still charging us monthly.
Once we realized that our money was everywhere, we knew we needed to put it into place. We created an excel document to organize our income, budgets, and debts (I love organizing things). We determined what we needed to keep to survive, what the minimum payments for our debt were, and other costs we absolutely have to have.
We wrote it all down and made important decisions as to how much we would spend on food, how much we were willing to pay for gas, etc. This was our budget. If we followed our budget, we knew we could put a significant amount of extra cash toward our debt (which is exactly what we want to do).
The hardest part about developing a budget, though, is not actually the planning, but the sticking to it. The problem we have is that when we try to follow our budget with our debit cards, we somehow always end up off. This time, we knew that we had to do our budgeting right. We pulled out some business envelopes, withdrew some cash, and began using the cash envelope system for our budget.
Almost like magic we were able to stick to our budget – better than ever before. The reality is that plastic money is easy to overspend, but when you have cold, hard cash in your hands, it’s hard to not notice it leaving. When it’s gone, it’s gone.
Developing a Side Income
The second step we took toward aggressively paying off our student debt was to develop a source of income on the side. For me, that meant blogging. I worked as hard as I could to develop a blog that focused on my goals, that inspired people, and that helped people to reach their dreams of becoming financially free.
My wife and I both work with a caterer as we are able in order to earn a little extra money. Each event lasts around six-seven hours and pays us each $100, but we can only score around one to three events per month. Jobs such as dog walking, house / babysitting, and even renting out space are great ways to make a few extra bucks within your community.
We also have started freelancing and taking up positions in the virtual assistant world. My wife has started working longer hours and taking “on-call” shifts. We sell items from our home that we no longer need and we utilize companies that offer legitimate ways to make money online. I test them out and share them on my blog for my readers to see and utilize.
Basically, we are doing whatever it takes to earn an extra income and then ensuring that the entirety of that income goes straight toward our debt repayment goals.
Related tip: You can answer surveys and make extra money! The companies I recommend include: American Consumer Opinion, Swagbucks, Survey Junkie, Pinecone Research, Prize Rebel, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
Learning How to Live Frugally
Earning an extra income can only get you so far if your spending is too high. Therefore, we also spent a lot of time learning how to live frugally and sharing it on the blog. We are learning new ways each and every day to reduce our spending and live our lives to the fullest on a frugal budget.
Some of our favorites in the kitchen include baking our own bread (which saves us over $250), making our own pasta (which saves us over $100), growing our own vegetables (which saves us hundreds), and learning how to can (which saves us tons)! While each of these individually may not seem like a lot, when added together the savings can be incredible.
The frugal living tips don’t have to end in the kitchen, though. My wife and I are learning great ways to save thousands per month by cutting the cord on cable and other subscriptions, reducing our cell phone bill, and even finding new ways to entertain ourselves that don’t cost money.
As Dave Ramsey so eloquently puts it: “Live like no one else, so later on you can live like no one else.”
Living a frugal lifestyle means making cleaning supplies and hygiene products instead of buying them, making food from scratch instead of eating out, and playing board games instead of going to the clubs. It’s a lot of cutting now, but by living like we are broke, we are putting money toward debt so that later we can live the way we want to live.
How We Paid Off Almost $10,000 in Debt in 10 Weeks
Ever since we started paying off our debt aggressively, we have been competing against ourselves. When we paid off $3,000 in one month, we knew that we could do better the next month and so we did.
It took ten weeks before we had paid off almost $10,000, but the next ten weeks will be even better, we can assure you of that. How? Because we are working as hard as we can to budget, to be frugal, and to earn extra money – no matter what it takes.
The ultimate goal here is to pay off our debt as quickly as possible and that’s exactly what we are doing. We are not putting a date on our debt repayment because we don’t want to limit ourselves to that date. We want to work to surpass any dates that could have been put down and by sticking to our budget, earning side incomes, and living frugally, we can do it.
Author bio: Cassie Jahn is the author of a DIY blog devoted to living life to the fullest on a frugal budget. DIY Jahn began to help Cassie to stick to her plan to aggressively pay off her student loans, in hopes to inspire others to do the same.
How much debt do you have? Are you trying to eliminate it?
If you are new to Making Sense of Cents, I am all about finding ways to make and save more money. Here are some of my favorite sites and products that may help you out:
Find ways to make extra money – Here are over 75 different ways to make extra money.
Cut your TV bill. Cut your cable, satellite, etc. Even go as far to go without Netflix or Hulu as well. Buy a digital antenna (this is the one we have) and enjoy free TV for life.
Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I earn over $100,000 a month online through my blog and you can read more about this in my monthly online income reports. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $2.75 per month plus you get a free domain if you sign-up through my tutorial. Also, I have a free How To Start A Blog email course that I recommend signing up for.
You should know your credit score – Check your credit score with Credit Sesame for free!
Answer surveys. Survey companies I recommend include Swagbucks, Survey Junkie, American Consumer Opinion, Pinecone Research, Opinion Outpost, Prize Rebel, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
You can save money and get cash back at the grocery store. Read my review and learn how to here.
Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 cash back too!
Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
I highly recommend Credible for student loan refinancing. You can lower the interest rate on your student loans significantly by using Credible which may help you shave thousands off your student loan bill over time.
Try InboxDollars. InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming grocery coupons, and more. Also, by signing up through my link, you will receive $5.00 for free just for signing up!
Have you ever wondered if you could get your Medicare premiums automatically deducted from your bank account each month? Less hassle, less administration?
Good news: You can do this with Medicare Easy Pay.
Medicare Easy Pay is a free service from the federal government that will deduct your Medicare payments from your bank account on a monthly basis.
Who can sign up for Medicare Easy Pay?
You can set up Medicare Easy Pay if Medicare is sending you bills — that is, if you’re paying Medicare directly for your Part A or Part B premiums, or for your Part D income-related monthly adjustment amount (IRMAA).
Most people get their Medicare premiums deducted from their Social Security benefits, so they don’t need to sign up for Medicare Easy Pay.
If you’re getting bills from the Railroad Retirement Board, you cannot sign up for Medicare Easy Pay. You must pay the Railroad Retirement Board directly.
And note that if you’re paying for a separate Part D, Medigap or Medicare Advantage plan — which are plans sold by private insurers — you’ll pay premiums to the insurance company. These payments aren’t eligible for Medicare Easy Pay.
How do you sign up for Medicare Easy Pay?
There are two methods for setting up Medicare Easy Pay:
Log in to your Medicare.gov account. Don’t have one? You’ll need to create one. Then select “My Premiums” and “Sign Up” to access an online form.
Fill out a paper form. You’ll need to mail the form to the Centers for Medicare & Medicaid Services (CMS).
What information do you need to sign up for Medicare Easy Pay?
If you’re signing up online: You’ll need your Medicare card and your bank account information.
If you’re signing up using a paper form: You’ll need your Medicare card and a blank check from your bank account, plus some general information about yourself. If you’re signing up to have payments deducted from a checking account, you’ll need to attach a blank, voided check to your form.
How long does it take to activate Medicare Easy Pay?
It can take six to eight weeks to process your information for Medicare Easy Pay. In the meantime, continue paying your premiums directly.
Once Medicare Easy Pay is active, your Medicare bill will say “THIS IS NOT A BILL” in the upper right corner, according to the CMS. (Here’s a sample.) Your premiums typically will be deducted on the 20th of the month (or the next business day).
Your first deduction may be as much as three months of premiums, which is the Easy Pay limit. If you owe for more than three months, Easy Pay won’t deduct automatically and you’ll need to pay your Medicare premiums a different way until what you owe is within the three-month limit.
When your Medicare premiums change, the amount deducted from your account will update automatically.
What if there’s a problem with the payment?
If your premium can’t be deducted, Medicare will send you a letter explaining why it couldn’t deduct your premium. Then you’ll get your next Medicare bill in the mail, and you’ll need to pay the premium directly. Once you’ve caught up on payments, your Medicare Easy Pay service will resume. If it doesn’t, contact Medicare.
If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).
Life insurance is an important component of most all financial plans. That’s because when you have life insurance, you can be much better assured that your loved ones and survivors will be able to go financially in case of the unexpected.
The proceeds from a life insurance policy can be used for many different things, including the payoff of final expenses or other large debts, as well as ongoing living expenses so that loved ones won’t have to drastically change their lives.
When purchasing a life insurance policy, it is important to review several factors before moving forward. Certainly, narrowing down the right type and the amount of life insurance that you are applying for is essential. This is because you don’t want loved ones to be underinsured.
However, it is also essential to review the insurance company through which you are purchasing the coverage. That is because the insurance carrier should ideally be strong and stable financially, and it should also have a good reputation for paying out its policyholder claims. One insurance carrier that has an excellent track record in the industry is AAA.
Table of Contents
The History of AAA Life Insurance Company
AAA Insurance Company has been in the business of helping its customers since 1902. The company began as The Automobile Club of St. Louis. The company grew very quickly over the next several years. And, after opening regional offices throughout the state of Missouri, the firm changed its name to the Automobile Club of Missouri (ACMO).
Still, in its early stage, the company hired a young Harry S. Truman, who sold many memberships prior to setting out to pursue his military and political career. AAA introduced many new ideas into the auto insurance world, including roadside service.
Over the next several decades, the company continued to grow and expand, absorbing many smaller auto clubs throughout the state and throughout the country. In 1969, AAA Life Insurance Company became a part of AAA. This company offers both life and annuity products. Today, AAA Insurance is a large and thriving insurer that offers a wide variety of both insurance coverage and other financial products to its customers.
AAA Life Insurance Company Review
AAA Life Insurance Company is headquartered in Livonia, Michigan. Currently, the company has approximately 1.2 million policies in force. Not only does AAA Life Insurance Company help its customers to save and protect their financial assets, but the company is also very involved in community efforts. For example, over the past decade, AAA has supported various entities by raising money and / or serving in other manners. Just some of these organizations include:
American Heart Association
Alzheimer’s Association
American Red Cross
American Diabetes Association
American Cancer Society
The company also has an excellent reputation for providing outstanding customer service to its policyholders. The company provides information, including life insurance quotes, via the Internet, telephone, and / or through in-person visits with an agent.
Company Ratings and BBB Grade
AAA Life Insurance is considered to be financially strong and stable, and because of that, it is highly rated in the industry. The company has a rating of A- (Excellent) by A.M. Best, which is the fourth highest rating out of a possible 16.
The company is not an accredited member of the Better Business Bureau (BBB), nor has it been provided with a letter grade between A+ and F. However, over the past three years, AAA Life Insurance Company has closed a total of 18 complaints through the BBB.
Of these 18 total complaints, eight had to do with problems with the company’s product and / or service, another five were regarding advertising / sales issues, and yet another five were in regard to billing and / or collection issues.
Life Insurance Products Offered By AAA
AAA Life Insurance Company offers several options for life insurance coverage. These include both term and permanent policies. The proceeds from these policies can be used by loved ones and survivors for any need that they see fit.
Term Life Insurance Coverage
With term life insurance coverage, the policy offers pure death benefit protection only, with no cash value or savings build-up in the policy. These policies are purchased for a set period, or “term.” There are several term life insurance options that are offered via AAA. These include:
Term with Return of Premium
The term with return of premium policy is offered for periods of 15, 20, 25, or 30 years. Insured individuals can be covered for between $100,000 and over $1 million. With these plans, the insured is covered throughout the life of the policy. And, if he or she survives that time period, then the premiums paid into the policy will be returned. (There is an additional amount of premium that is charged for the return of premium option).
Traditional Term Life Insurance
With the traditional term life insurance product, coverage of up to $5 million (or more) is available, with a minimum death benefit of $100,000. Coverage terms can be chosen from 10 years, 15 years, 20 years, 25 years, or 30 years. The premium payments are guaranteed to remain level throughout the life of the policy. Also, an insured may have the option to convert this term insurance over into a permanent form of life insurance coverage.
Express Term Life Insurance
Express term life insurance from AAA Life Insurance Company may be purchased via the Internet. These policies offer coverage of between $25,000 and $250,000 and the term lengths that can be chosen from are 10, 15, 20, 25, or 30 years. Those who are between the ages of 18 and 75 are eligible to apply.
Permanent Life Insurance Coverage
AAA Life Insurance Company also offers permanent life insurance coverage. With permanent insurance, the insured has both death benefit protection as well as a cash value component within the policy that can allow savings to build up. These savings can grow tax-deferred.
There are both whole life and universal life insurance policy options that are available through AAA. Whole life insurance offers long-term insurance coverage with fixed premiums for life. The whole life insurance plans that are offered via AAA include:
Simple Whole Life Insurance
The simple whole life insurance policy is easy to obtain. Coverage may be purchased between $5,000 and $25,000. There is no medical exam required to qualify for this plan. Rather, there are only just a few health questions to answer. An insured may also be able to obtain funds early if he or she is diagnosed with a terminal illness.
Guaranteed Issue Graded Benefit Whole Life Insurance
For those who are between age 45 and 85, the guaranteed issue plan may be a good fit. This policy offers coverage without any medical exam or health questions. It also offers guaranteed premiums.
Universal Life Insurance Coverage
Universal life insurance is also a permanent form of coverage, except that it offer more flexibility that whole life concerning premium payment, as well as where the premium dollars go. AAA offers two universal life insurance policies. These include the Accumulator Universal Life and the LifeTime Universal Life policy.
Other Insurance and Financial Products
In addition to life insurance coverage, AAA Life Insurance Company also offers other products as well. These include annuities (both immediate and deferred), and accident insurance coverage.
Annuities can help individuals to both save for retirement in a tax-advantaged way, as well as to provide an income in retirement – and this income can last for the remainder of the annuity holder’s life, regardless of how long that may be.
With an immediate annuity, an individual deposits a lump sum. This can either be cash from a savings or investment account, or it can be through a “rollover” from an IRA account or a retirement plan such as a 401(k) account. The income stream from the immediate annuity will then begin right away, or within a very short time period.
A deferred annuity provides the ability to build up savings over time. Here, the funds that are within the annuity are allowed to grow on a tax-deferred basis – which can allow the money inside of the annuity to grow and compound exponentially over time. Then, at a point in the future, the income stream will begin. In many ways, an annuity is like a personal pension plan.
Accident insurance is also available through AAA Life Insurance Company. Because accidents can – and often do – occur unexpectedly, this coverage can help to provide financial support to an individual who is involved in an accident, or that person’s loved ones.
There are some key benefits that are offered through the AAA Life Insurance Company’s accident insurance coverage. These include the following:
Hospitalization – Accidents can be an expensive situation – and sometimes, the hospitalization that is received may or may not be covered via a regular health insurance policy. With the AAA plan, an insured individual can be covered for up to $375 per day for a covered non-travel related accident, and for up to $1,500 per day on travel-related accidents. These benefits can be paid for up to 365 days per occurrence.
Recuperation – Sometimes, even when a person is released from the hospital, they may or may not be ready to go back to work. The bills, however, for everyday living expenses will continue to come in. The recuperation benefit on the AAA accident plan can offer another $1,500 per day in benefits that will help with recuperating from a travel-related accident, or up to $375 per day on a covered non-travel related accident. These benefits can be paid for up to 365 days.
Emergency Room and Urgent Care – The cost of emergency room care can also be quite high – and there may be some benefits that are not covered via a regular health insurance policy. With the AAA accident policy, an annual benefit of $1,500 can be paid for ER and urgent care that is received for a travel-related accident, and up to $375 per year can be paid for a non-travel related event.
Accidental Loss of Life – Unfortunately, some accidents will result in the loss of life. If this occurs, a benefit of $500,000 can be paid for the loss of an insured’s life when he or she had been traveling on a regularly scheduled airline flight. A benefit of $250,000 can be paid for accidents that result in the loss of life when the insured is either riding in or driving a private car, truck, motorcycle, self-propelled motor home, or bicycle. This benefit can also be paid if the insured had been traveling as a fare-paying customer on public transportation such as a train, bus, airplane, or taxi. In addition, $250,000 can be paid out in benefits if the insured was struck by a motor vehicle as a pedestrian, and a benefit of $62,500 can be paid for death that is due to a non-travel related covered accident.
AAA members who are at least age 18 or older are eligible to apply for the Member Loyalty Accident Insurance plan. There is no medical exam required to qualify for this coverage.
How to Get the Best Life Insurance Premium Quotes
When seeking life insurance quotes, it is best to work with an independent company that has access to multiple insurance carriers. That way, you will be more easily able to compare what is available to you.
If you are ready to move forward with getting life insurance quotes, we can help. We work with many top life insurance carriers, so can assist you with your needs. Term Life Insurance smoker applicants can find help and information here as well. Just simply take a few moments to fill out the form on this page to begin.
Southwest Airlines is the nation’s largest domestic carrier, but it offers a remarkably simple frequent flier program called Rapid Rewards. You simply redeem your points for about 1.4 cents each toward any unsold seat.
The Southwest Rapid Rewards Priority card offers the most perks of any of their credit cards, but that comes at a cost.
What Is the Southwest Rapid Rewards Priority Credit Card?
The Southwest Rapid Rewards Priority Credit Card is a premium travel rewards credit card offered by Chase. With its $149 annual fee, it’s the most expensive of the three Rapid Rewards consumer credit cards offered.
As a new applicant, you can earn 60,000 Rapid Rewards points and a 30% off promo code after using your card to spend $3,000 within three months of account opening. You can use this code for a round-trip ticket with multiple passengers, and it’s valid with both cash and points bookings.
You also earn 2x points on Southwest airlines purchases and from purchases from Rapid Rewards® hotel and car rental partners. The 2x points offer is also valid for local transit and commuting purchases, including rideshare providers such as Uber and Lyft. You also earn 2x points on your internet, cable, and phone bills as well as for select streaming services.
You should expect plenty of valuable benefits from a premium travel rewards card, and this card largely delivers. For example, you receive a $75 credit toward Southwest purchases each year as well as a credit toward four upgraded boardings annually. These upgraded boardings currently sell for $30 to $80 each, depending on the flight.
This card can also help you earn elite status in the Rapid Rewards program. You earn 1,500 tier qualifying points (TQPs) toward A-List status for every $10,000 you spend, and there’s no limit on the number of TQPs you can earn.
Other perks include 25% back on in-flight purchases as well as cardholder benefits like lost and delayed baggage insurance, extended warranty coverage and a purchase protection policy.
There’s a $149 annual fee for this card, but thankfully there’s no foreign transaction fee imposed on purchases processed outside the United States. You also get a 7,500-point bonus on your account anniversary instead of flowers, which is worth about $105.
What Sets the Southwest Rapid Rewards Priority Credit Card Apart?
Nearly every airline offers several credit cards, but the Southwest Rapid Rewards Priority Credit Card is different for a few reasons. Mostly, it provides you with enough perks to help you justify its considerable annual fee. These perks include:
Big sign-up bonus. Earn 60,000 bonus points and a 30% off promo code after spending just $3,000 within three months. The promo code itself is a unique offer and can be very valuable.
Lots of bonus categories. Earn 3x points on Southwest ticket purchases plus 2x from transit, commuting, and rideshare purchases and 2x from internet, cable, and phone services and select streaming purchases. You also earn 2x when you book reservations with Southwest’s hotel and rental car partners.
Credit toward Southwest tickets. You get $75 back from your Southwest purchases each year. You also get a 7,500-point bonus on your account anniversary, which is worth about $105. For many travelers, these two features can justify this card’s annual fee.
Earn credit toward A-List status. This card lets you earn 1,500 tier qualifying points (TQPs) toward A-List status for every $10,000 you spend, and there is no limit on the number of TQPs you can earn. A-List status offers you perks such as a better boarding position and free same-day confirmed flight changes.
Four upgraded boardings per year when available. This gives you a boarding position of A1-15, which normally costs $30 to $80 per flight.
Key Features of the Southwest Rapid Rewards Priority Credit Card
The Southwest Rapid Rewards Priority Credit Card is not a very complicated credit card, but it does offer a lot of features that are worth knowing about before you apply.
Sign-Up Bonus
Earn 60,000 bonus points and a promo code for 30% off after spending just $3,000 within three months. The 30% off code has the potential to offer tremendous savings to large families who use it to book a round-trip ticket.
Earning Rewards
Earn 3x points on Southwest ticket purchases plus 2x from transit, commuting, and rideshare purchases and 2x from internet, cable and phone services, and select streaming purchases. You also earn 2x when you book reservations with Southwest’s hotel and rental car partners. You earn one point per dollar spent on all other purchases.
Redeeming Rewards
Rapid Rewards points are worth about 1.4 cents each toward airfare in any of their four fare classes. There are no restrictions on the number of seats available for redeeming rewards — you can use your points for any unsold seat.
Important Fees
This card has an $149 annual fee. No doubt, this will turn off a lot of potential applicants. However, it’s important to consider it in the context of the sign-up bonus as well as the $75 annual travel credit, 7,500-point anniversary bonus, and the four upgraded boardings each year. Fortunately, there’s no foreign transaction fee.
Credit Required
This card requires good or better credit to qualify. If your FICO score is much below 700, then you’ll likely have trouble being approved.
Advantages
This card has several key advantages that help justify its pricey annual fee.
Lots of benefits. This card offers numerous benefits, such as travel fee credits, upgraded boardings, in-flight purchase discounts and an anniversary bonus. You also get several purchase protection and travel insurance policies.
Bonus points. With all the 3x and 2x bonus categories, this card makes it easy to earn a free trip.
Big sign-up bonus. You can earn a bonus worth hundreds of dollars, and the minimum spending required is lower than many competing cards. The 30% off code can also be extremely valuable.
Easy rewards program. Other airline credit cards offer miles that can be difficult and confusing to redeem for the most value. But the Southwest Rapid Rewards program still keeps it simple.
Disadvantages
Before applying for this card, you have to consider some of its drawbacks and missing perks.
Expensive annual fee. There’s no way around the fact that you must pay $149 a year to use this card, so you have to use the rewards and benefits of this card to justify it.
No promotional financing offer. If you’re looking for a credit card with a 0% APR introductory financing offer, this isn’t it.
Forget first-class. You can’t redeem your Rapid Rewards points for a first-class seat because there are only economy seats on Southwest.
No overseas awards. Like first-class, Southwest fliers will find Europe, Asia, and much of the world out of their reach. However, Southwest does fly to Hawaii, Mexico, the Caribbean and even Central America.
How the Southwest Rapid Rewards Priority Credit Card Stacks Up
One of Southwest’s closest competitors is JetBlue, and it offers the JetBlue Plus card from Barclays. The JetBlue card has a slightly better sign-up bonus and substantially more points for airline ticket purchases. However, JetBlue points are worth about 1.2 cents each, which is significantly less than Southwest points.
Southwest Rapid Rewards Priority Credit Card
JetBlue Plus Card From Barclays
Annual Fee
$149
$99
Sign-Up Bonus
Yes
Yes
Rewards Rate
Up to 3x
Up to 6x
0% Intro APR
None
None
Foreign Transaction Fee
None
None
Credit Needed
Good or better
Good or better
Final Word
Fans of Southwest Airlines know that it’s a different type of carrier than the likes of American, Delta and United.
Instead of business-class tickets to Europe, Southwest fliers prize little perks like an upgraded boarding position and easy-to-use rewards. That’s where the Southwest Rapid Rewards Priority Card delivers.
But for those who aren’t fully onboard with the way Southwest works, the $149 annual fee can be hard to swallow. It’s also not a card for those whose home airport doesn’t offer much Southwest service. And for these more casual Southwest customers, it can be worth considering the Rapid Rewards Plus and Premier cards.
But if you find yourself regularly boarding Southwest and are looking for the best card to maximize your rewards and benefits, then there’s no substitute for the Southwest Rapid Rewards Priority Credit Card.
Disclaimer: The information related to the Chase Southwest Rapid Rewards Priority Card has been collected by Money Crashers and has not been reviewed or provided by the issuer of this card.
The Verdict
Our rating
Southwest Rapid Rewards Priority Credit Card
This is Southwest’s most feature-filled credit card for consumers. It includes lot’s of opportunities to earn bonus points, and it features strong benefits. If you’re a regular Southwest flier, you need to look into this card.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Jason has been writing about personal finance, travel, and other topics on blogs across the Internet. When he is not writing, he has a career in information technology and is also a commercially rated pilot. Jason lives in Colorado with his wife and young daughter where he enjoys parenting, cycling, and other extreme sports.
Balancing your checking account may seem like a task straight out of a bygone era, akin to winding a grandfather clock or sewing buttons onto a shirt.
However, the reality is quite different. It is an essential financial task, one that could help you dodge hefty overdraft charges, detect fraud early, and provide a true understanding of your spending patterns. So, let’s demystify this often misunderstood task.
The Importance of Balancing Your Checking Account
Regularly balancing your checking account is a cornerstone of sound money management. It’s not just about avoiding those pesky overdraft fees (though that is a significant bonus), it also provides invaluable insights into your spending habits. This will enable you to track your progress towards your money goals and make adjustments as necessary.
A balanced checkbook gives you a clear view of your financial accounts, showing you what’s going in, what’s going out, and most importantly, what’s left. By keeping track of all your transactions, you’ll be able to spot if a wrong amount has been deducted or if a direct deposit hasn’t been made. This can also help you to detect fraud at the earliest opportunity, helping to safeguard your hard-earned money.
Checking Account Basics: Understanding Key Terminologies and Concepts
To successfully balance your checking account, it’s crucial to comprehend the basic components of it. By understanding these terms, you’ll be better equipped to manage and reconcile your checking account.
Debit Card: Your bank will likely issue you a debit card that allows you to access the funds in your checking account electronically. When you make a purchase with your debit card, funds are withdrawn directly from your account. It’s important to keep track of all transactions made with your debit card to ensure your records accurately reflect your spending.
Pending Transactions: These are transactions that have been made but have not yet been fully processed by your bank. They are usually deducted from your available balance but may not be reflected in your current balance until the transaction has fully cleared.
Bank Balance: This is the amount of money in your checking account at any given time. It’s important to note that your bank balance can change frequently throughout the day as deposits and withdrawals are made.
Monthly Statement: This is a summary provided by your bank of all transactions into and out of your account over a particular period, typically a month. The monthly statement includes the dates and details of your transactions, the balance at the beginning and end of the period, and any charges incurred. It’s crucial to carefully review your monthly statement each month to identify any potential errors or fraudulent activity.
Automatic Payments: These are recurring payments set up to pay bills directly from your checking account. They are convenient for paying regular bills, such as utilities or subscriptions, but can lead to overdrafts if not properly accounted for in your balance.
Overdraft Fees: If you withdraw more money than you have available in your checking account, you’ll likely be charged an overdraft fee by your bank. Regularly balancing your checkbook can help you avoid these costly fees.
The tools you need for checkbook balancing can be as simple or as complex as you’d like them to be. The traditional approach involves using a paper checkbook register, a bank statement, a pen, and a calculator. But in our digital age, we have online and mobile banking tools at our disposal, and a host of other tools to make this process much simpler.
You might choose to use Google Sheets or another spreadsheet software to create a check register. You can also use mobile banking apps that provide real-time updates on your transactions, making it much easier to keep up with your account activity.
How to Balance Your Checking Account
So, how do you actually balance a checkbook? Here’s a step-by-step guide, using the traditional checkbook register method.
Step 1: Gathering Information
Start by gathering all your receipts, ATM slips, deposit slips, and bank statements. If you have access to online banking, make sure to check your account for any recent transactions that haven’t yet made it onto your paper statement.
Step 2: Recording Transactions
Write down every transaction in your checkbook register. This should include deposits, checks, debit card purchases, ATM withdrawals, bank fees, and any other financial transactions. Doing this ensures your records match your bank’s records, making it easier to detect any errors or discrepancies.
Step 3: Reconciling Your Check Register With Your Bank Statement
Review your bank statement for any additional charges or deposits that you might have missed. Make sure to update your check register with these transactions. Then, add up all the deposits, and subtract all the payments and withdrawals to calculate your checking account balance.
Step 4: Calculating Your Balance
The balance in your checkbook should match the current balance in your bank account. If they do not, you will need to check your calculations and go through each entry to identify any potential errors or discrepancies. This step helps you ensure the available balance matches your own records.
Step 5: Addressing Any Discrepancies
If the balances do not match, start by checking for common errors, such as transposing numbers or forgetting to record transactions. Check your receipts and the online banking portal to ensure you haven’t missed any transactions. If you find any transactions posted to your account that you did not authorize, contact your bank immediately.
Regular Maintenance and Good Habits
Balancing your checkbook is not a one-time activity. It’s a habit that needs to be developed and maintained. Aim to do this at least once a month when your bank statement arrives. For those who frequently use their debit cards, write checks, or have a lot of automated payments, weekly check-ins might be beneficial to ensure all transactions are recorded correctly.
Maintaining a balanced checkbook may also prevent you from spending more than what’s available, thereby avoiding overdraft charges. It also helps in tracking your spending habits and understanding your spending patterns, which can be instrumental in managing financial matters.
The Role of Technology in Balancing Your Checking Account
In our digital age, technology plays a significant role in simplifying the process of balancing checking accounts. Online and mobile banking apps provide a real-time view of your account, enabling you to check your current balance, deposit checks, and monitor transactions from anywhere, at any time. This gives you the flexibility to manage your financial tasks on the go, reducing the time and effort required for this task.
On the other hand, it’s crucial to understand that while these apps are incredibly handy, they should not replace the practice of keeping your own records. The balance shown on these apps might not reflect pending transactions or paper checks that haven’t cleared yet.
Conclusion
Balancing your checking account is an essential component of sound financial management. It’s not just about avoiding fees and detecting potential fraud. It’s about taking control of your money and understanding how you’re using it. With the right tools and a bit of discipline, you can make this task part of your regular financial routine.
Frequently Asked Questions
How often should I balance my checkbook?
It’s generally recommended to balance your checkbook once a month. However, if you frequently use your debit card or have numerous automatic payments, you might want to consider balancing your account on a weekly basis. Regularly keeping track of your financial transactions will help you avoid errors and keep a close eye on your spending habits.
Is it safe to balance my checkbook online?
Online and mobile banking apps are generally safe to use. Most banks provide strong encryption and security measures to protect your data. However, always ensure you’re using a secure network when accessing your bank account online and update your apps regularly to get the latest security features.
What should I do if I find a fraudulent transaction in my account?
If you notice a transaction that you did not authorize, you should report it to your bank immediately. Most banks have policies in place to protect customers from fraud, and you may not be responsible for any fraudulent charges if they’re reported in a timely manner.
What’s the difference between my current balance and my available balance?
Your current balance is the total amount in your account at the start of the business day. This includes all transactions, like deposits and withdrawals, that have been posted to your account. On the other hand, your available balance is your current balance minus any holds (like pending transactions).
How can I avoid overdraft fees?
One way to avoid overdraft fees is by keeping an accurate record of all your transactions. By knowing exactly how much money is in your account at all times, you can avoid spending more than what’s available. Some banks also offer overdraft protection services that link your checking account to a savings account or credit card to cover any overdrafts.
How can balancing my checkbook help with my budget?
Balancing your checkbook gives you a clear understanding of how much money is coming in and going out of your account. This can help you identify spending patterns, prioritize your spending, and set realistic budgets.
I rarely write checks. Do I still need to balance my checkbook?
Yes, even if you don’t write checks, balancing your checkbook is still essential. Any type of transaction, be it debit card transactions, automatic payments, or ATM withdrawals, can cause discrepancies in your account balance. By balancing your checkbook, you can ensure that your account has the correct balance and catch any errors or fraudulent transactions.
I’ve made a mistake and my account is overdrawn. What should I do?
If you realize that you’ve made a mistake and your account is overdrawn, it’s important to address it as quickly as possible. Deposit money into your account to cover the overdraft and any associated fees. Then, review your recent transactions to understand what led to the overdraft and how you can avoid it in the future.
Images of devastation emerged after the Japanese earthquake and tsunami. We watched water sweep away vehicles and houses; we saw stunned men and weeping women in the ruins. But we also heard about survivors whose homes weren’t flattened or inundated, people who subsisted on stockpiled food and water while waiting for help. Living on the “Ring of Fire” means temblors and tidal waves are a fact of life — and so is disaster preparedness.
We need to be prepared, too. The Department of Homeland Security’s Ready America program says we should be able to sustain ourselves for at least three days after an emergency, whether that’s a hundred-year storm or a civil insurrection. How ready are you?
Right now, before anything bad happens, is the time to build your emergency kit — and you can do it on a budget. In fact, you probably already have some (or a lot) of what you need.
The (Sometimes Icky) Basics
During those three days you need to be fed, hydrated and sheltered. You also need a place to poop.
Yeah, that’s gross. You know what else is gross? The idea of everyone in your apartment building or subdivision yelling “Gardyloo!” and flinging slops out the window. Cholera epidemic, anyone?
When I was a kid, predictions of bad weather had us filling bathtub and buckets. That’s because if we lost power we lost our well pump, i.e., no way to flush the toilets. That’s still the first line of short-term defense; if you have any warning, stash yourself some water.
When that’s gone you’ll need at least one large container into which everyone can evacuate. Maybe a repurposed five-gallon detergent, paint or pet-litter bucket? If you don’t have one:
It’s possible to buy a toilet seat that snaps onto a bucket, which makes things easier. Or buy a prefab one (search online for “bucket toilet”) for $20 or less. Decide now where you’ll put your temporary toilet. The garage? The back porch? Maybe even in the actual bathroom? Anywhere but the place where you plan to eat and sleep. Trust me on this.
Ready for an overshare? Here’s how I’d handle disposal if the you-know-what hits the fan here in Seattle:
Use the bucket (in a former life, it held detergent)
Put soiled paper into a garbage bag (and tie it really tightly between uses)
Flush the contents of each, little by little, once the emergency has abated
Please do not do your business in the condo-complex yard, no matter how much fun it is to pee outdoors.
Important: You’ll want a bottle of hand sanitizer close to the bucket. Really close. E. coli is nothing to fool with.
Food and Drink
Ready America recommends one gallon of water per person per day. It’s easy to buy bottled water but much cheaper to fill up two-liter soda bottles, or inexpensive pitchers or jugs. (Don’t drink soda? Surely someone you know does.)
Refill the containers every few months; mark it on the calendar so you don’t forget. Don’t just dump the old water, though. Use it in some way, such as:
Watering houseplants or your garden
Bathing (add hot water unless you like your tub-time tepid)
Cooking
Filling pet dishes
Doing hand laundry
Washing vegetables or fruit
When it comes to emergency rations, you can go as stripped-down or as fancy as you like. But it must be something you’d eat anyway, because you’ll need to rotate and replace your stock. If an earthquake happens six years from now, do you want to be eating 2011 ramen?
Some obvious choices:
Canned beans, stews, soups, fruits, vegetables, meats and/or fish
Protein bars, granola bars, dried fruit
Powdered milk and cereal
Peanut butter or other nut butters
Crackers or pilot bread; I recommend the latter, because it lasts for-freakin’-ever
Note: For more on pilot bread, see this funny video from The Anchorage Daily News.
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Then watch a second, even funnier video from the same source.
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If you’ll have a way to heat water, consider a few instant soups or other dehydrated foods such as hummus or bean dip. Flavored noodle cups/bowls do go on sale; check Asian markets for the best selection. Hot drinks are both warming and soothing, so stock up on bouillon cubes, teabags, instant coffee and hot chocolate mix.
Survival Shopping at Bargain Prices
The camping section of your local sporting-goods stores has quite a selection of dehydrated meals. So do online stores that sell survival/disaster preparedness supplies. But I’m focusing on inexpensive ways to prepare.
So watch for sales and use coupons and/or rebates when possible. A few of my better supermarket deals: envelopes of pre-drained tuna for free, granola bars for a penny each, cocoa mix for 5 cents per serving, a large bag of M&Ms for 50 cents, 12 ounces of peanuts for 69 cents.
Olives, marinated veggies, sun-dried tomatoes and other fancy foodstuffs from the dollar store will liven up your basic grub. After two days of PBJs and canned beans, a few pickled vegetable will taste like manna.
The dollar store has cheap bandages and rubbing alcohol, too. So do places like CVS, Walgreens and Rite Aid; I’ve obtained baby wipes (aka “shower in a pouch”), hand sanitizer, analgesics, energy bars, crackers and batteries free or nearly free thanks to rebate programs at those stores.
About those batteries: Aim for at least one flashlight per room. Hand-cranked flashlights (and radios) don’t need batteries. If you can’t afford one right now, put it on your wish list; maybe Great-Aunt Irene will give you that instead of a cheese log next Christmas.
If you must use candles, select votive-type ones and set them inside wide-mouthed jars, placed in areas where no one can accidentally knock them down. Buy the votives for pennies at post-holiday clearance sales. Those sales are also good for cheap paper plates and bowls — not eco-friendly but really useful if you can’t do dishes for days.
Layering is essential in cool or cold temperatures. Watch for thermal underwear, wool pants and other useful items on Craigslist/Freecycle or at yard sales. I bought polypropylene longhandles and a down vest at a thrift store. Make sure everyone has a stocking cap, too.
Look around your house to see how much of this stuff you already own. Most of us at least have sweaters or sweatshirts. If you’re not in a super-cold area, a comforter might double as a sleeping bag. A hibachi could substitute for a bottled-gas camp stove — but remember you can use these things outdoors only, because carbon monoxide is deadly.
Miscellaneous Tips
You can’t truly be ready for a disaster. It’s always stressful and often terrifying. However, you can at least be prepared. Here are a few more items to keep in mind:
Learn the location of your local/regional emergency shelter, just in case.
Keep a cache of cash — smalls bills and coins — on hand. No power means no debit or credit if you do find a store that’s open.
Put supplies where you can get at them easily, not down in the crawlspace or up in the rafters.
Wheeled garbage cans make great storage: Your items will be protected and movable. Label each one so you can find what you need, fast.
Water left over after making tea? Don’t let it get cold again — pour it into a thermos.
You’ll want basic first-aid supplies, including an anti-diarrheal medication. Many of these items can also be bought cheaply or free with those drugstore rebates.
On maintenance meds? Get in the habit of refilling as soon as you’re allowed, i.e., don’t wait until you take your last pill to call it in.
Choose no-salt canned vegetables. Not only are they healthier, you can use the drained-off liquid to dilute canned soup. Save the syrup from canned fruits, too, to sip for quick energy, settle an upset stomach or sweeten a cup of tea.
Don’t forget pet food and litter. Factor in extra water for Fido and Fluffy, too.
Have some playing cards or small games that everyone can play. I suggest Mad Libs.
Make sure you have a manual can opener. You’ll feel darned stupid asking to borrow a neighbor’s.
How about it, readers: Any ideas for getting ready without breaking the bank?
Inside: A biweekly budget is a budget that is broken into two-week periods. Learn how to create biweekly budgets and download your free template.
Many people create budgets, but only a few budget on a biweekly basis.
That is an interesting statistic because 43% of Americans are paid on a biweekly pay period (source).
So, the thought process is more people should be interested in learning knowing how to create a biweekly budget. But, in reality, most people give up on budgeting or move to a budget-by-paycheck method.
Recently, we moved over to a biweekly pay period. And thus, we quickly had to change how we focused on budgeting.
While most financial bloggers and gurus would agree, budgeting with biweekly paychecks makes the whole concept of budgeting hard.
While biweekly budgeting isn’t easy, it can be done!
This post will show you how to create an easy-to-manage and effective biweekly budget so that you can conquer your financial goals in the most efficient way possible!
We will go through the exact steps I use to create a biweekly budget to cover two weeks’ worth of expenses, get one month ahead on your bills, or adjust your planning to cover your monthly expenses.
This is a basic example, and you should use your own personal situation when developing your own budget.
Do you struggle to keep your finances on track? If so, here are some tips for creating a biweekly budget.
What is a biweekly budget?
A biweekly budget is a budget that takes into account a person collecting a paycheck every 14 days. This type of budget is beneficial for those who are paid on a biweekly schedule, as it allows them to plan their spending more effectively.
However, many people find it difficult when bills are due on a monthly basis.
Difference between biweekly and semi-monthly paychecks
When receiving paychecks twice a month happens with two types of pay schedules either biweekly or twice-per-month. The difference between these two schedules is the number of checks per year.
Those who are paid biweekly receive 26 checks per year, while those who are paid twice-per-month receive 24 checks per year.
Making a budget on a biweekly income can be difficult because the total number of checks received in a year varies depending on the pay schedule you have.
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How does a biweekly budget work?
A biweekly budget divides your budget into two parts, one for each paycheck that is received. This can be helpful for those who want to better track their spending or for those who want to save money.
It can be helpful to think of your biweekly budget as two separate budgets – one for bills and one for everything else.
When you create a biweekly budget, you are essentially creating two budgets over the span of ten months. Then, in the other two months, you will receive three paychecks; thus, need to create three budgets.
Since many monthly expenses remain the same when switching from a month budget to a biweekly budget, knowing which expenses should be increased or decreased beforehand can make the process smoother.
Additionally, it is helpful to know how much money you will need for each check. That way, you won’t have to worry about bouncing checks or accidentally overdrawing your account.
How to create a biweekly budget
Creating a biweekly budget is a great way to start getting your finances in order. You can either create your own template or use one of the many templates that are available online for free.
One popular template is ours!
Money Bliss Biweekly Budget Template (see below to get your copy). This template is available as a free download and can be used in conjunction with our budget binder. The planner allows you to track your income and expenses, as well as financial documents such as bills and bank statements.
There are a few key things to keep in mind when creating a biweekly budget:
Adjust your budget as needed.
Be flexible when adjusting to this 2 week budget style.
Compare your regular expenses to your spending from the past month.
Now, here are the steps to creating a biweekly budget that works.
Step 1: Print out a calendar
You need to print out the dates you get paid from your employer. On the biweekly paycheck, Fridays are usually pay dates; you just need to know which Fridays!
So, print out a blank calendar. Write down when you get paid along with when your bills and expenses are due.
This will help you get an idea of where you are spending your money and where you can cut back.
Many people find it helpful to color code by category and add stickers. This will help you see your budget at a glance.
Step 2: Put in a buffer
This will help ensure that you don’t have to worry about going into debt if something unexpected comes up.
Ideally, you should try to save at least two weeks’ worth of living expenses so that you know you’ll be able to cover your costs even if something goes wrong.
For us, all of our income goes into an “income checking” account. Then, at the beginning of the month, we transfer money into our “bills checking” to cover our expenses for the month.
Then, we always have at least one month of expenses on hand – just in case.
Step 3: Organize expenses
The easiest way to do this is by category. There are a few different ways to categorize your expenses, but the most common are:
Fixed or recurring expenses: These are expenses that happen every month, like rent or utilities
Variable or occasional expenses: These are expenses that happen each month but vary in amount, like groceries or entertainment
Annual or quarterly expenses: These costs are less frequent, but take a good chunk of your budget like an annual insurance payment or kid’s sports fees
One-time only expenses: These are one-time only costs and you don’t anticipate them again.
For most people, the struggle happens when organizing expenses. The expenses you “forgot” about are what blow your budget. Honestly, these are not forgotten expenses – just something you forgot to plan for.
Step 4: Focus on Zero Based Budgeting
Additionally, it’s important to use a zero-based budgeting approach.
With this method, you start by assigning every penny of income a job, whether it be for rent, groceries, or savings. This way, you can make sure that you’re not overspending each month.
A zero-based budget is a type of budget that starts with the assumption that there is nothing in your bank account.
This includes both predictable and unpredictable costs.
In the next steps, you will lay out what paycheck will cover what bills.
For example, some costs, like your rent or mortgage payment, will likely stay the same from one biweekly period to the next. By taking into account both types of expenses, you can get a more accurate picture of how much money you will need each pay period.
Learn more about zero based budgeting.
Step 5: Write your first biweekly budget
Writing a biweekly budget is the first step to creating financial stability. It’s important that you set up a plan for each paycheck to make sure your bills get paid.
When creating your first biweekly zero-based budget, you’ll want to start by paying your immediate obligations. This includes any bills or fixed expenses like rent or car payments that are due during the first pay period. After that, focus on covering your variable expenses such as groceries, gas, or eating out.
To make sure every dollar has a job, you should consider these tips:
If you have any leftover money at the end of the month, send it to your savings or make extra debt payments.
Make sure that each category in your budget has a specific amount assigned to it.
Keep track of your spending so that you can stay on track and adjust as needed.
Paying your most important bills first is a crucial step in making sure that your finances are on track.
Step 6: Write Your second biweekly budget
The second biweekly budget is a budget that’s typically created for the 2nd paycheck of the month. This budget would cover the next two weeks and may need to cover expenses at the beginning of next month before you get paid again.
Just like creating a budget plan for the 1st paycheck, you will do the same again. Prioritize any fixed expenses first, then add in variable expenses or sinking funds to contribute to.
In order to make your budget as accurate as possible, you should account for fluctuations in your expenses. This is where the buffer comes in – you put a certain amount of money aside each month to cover any unexpected costs. Then, you can start planning for them in the upcoming months.
Once again, if you have leftover money after budgeting for the two weeks, you can either send it to your savings account or start paying down your debt. If you choose to save, make sure that the money is in a place where it will earn interest and grow over time. If you choose to pay down debt, make sure that the payments are more than the minimum amount due so that you can see results quickly.
Step 7: Start tracking
Now that you have your biweekly budget template set up, it’s time to start filling in the numbers and track your budget. This part can be a little tricky, but with a little effort, you’ll be able to save money and get ahead on your debt payments.
First, take a look at your income and expenses for the month. How does this compare to what you’ve budgeted? If you’re coming in under budget in some areas, great! You can either use this extra money to bolster your savings or make extra debt payments. However, if you’re over budget in some areas, don’t worry – we’ll work through that below.
Next, take a look at your sinking funds.
These are accounts where you save money each month to cover specific expenses. How much money do you need to save each month in order to cover your bills? If you’re not sure, take a look at your past bills and use that as a guide. Once you know how much money you need to save, divide it by two and put that amount into your biweekly budget.
This will help ensure that you always have the money you need saved when the bill comes due.
If you have any leftover money after filling in your budget, send it to savings or make extra debt payments.
You can also use this extra money to invest in yourself (by taking classes, for example), but be careful not to overspend!
Creating and sticking to a biweekly budget is a great way to start saving money and getting your finances under control.
Biweekly budgeting tips
When it comes to budgeting, biweekly budgets can be a helpful way to streamline the process. By taking an hour or so at the beginning of each month to set up your budget, you can avoid potential headaches down the road.
It’s also important to remember to write everything down! This includes both fixed and variable expenses.
Tip #1 – Change Due Dates of Bills
If you’re having trouble with your bills, don’t hesitate to call companies and ask them to change the due dates.
This is something I do whenever I open a new credit card. I want the credit card date to close at the end of the month.
Tip #2 – Age Your Money
You may also want to save up for one month’s worth of expenses so that you always have a cushion in case something unexpected comes up.
This is also the first step to stop living paycheck to paycheck.
When you have a cushion of savings, you’re less likely to fall into debt if something unexpected happens.
Tip #3 – Track Your 2 Week Budget
There are plenty of tools for budgeting out there. In fact, here are the best budgeting apps available.
It offers a variety of helpful tips for getting started, as well as ways to automate time-consuming tasks. With this tool, you’ll be able to improve your budgeting and financial insights in no time!
Many popular options include a budgeting app, Excel, or Google Sheets. Pick what works best for you
Tip #4 – Focus on Your Goals & Finances
In order to be successful, you’ll need to set financial goals for yourself and make plans to achieve them.
As with any other goal, it’s easier said than done! It can take a lot of time, work, and effort to reach your goal.
If you’re not sure where to begin or what goals are right for you, here are some examples:
This is just a sample of the types of goals you can set. If you’re not sure where to start, just think about what’s important to you and your family.
What are some financial goals that you have? Write down your goals and make a plan to achieve them.
What to avoid when you’re paid biweekly
When you’re paid biweekly, there are a few things you should avoid in order to make the most of your money.
You need to learn which payment type is best if you are trying to stick to a budget.
Since biweekly budgeting can be more difficult, you need to know the pitfalls to avoid.
Pitfall #1 – Spending All your Money Too Quick
First, don’t spend your money as soon as you get it. This will leave you with nothing left for the following two weeks.
When having to use one paycheck to cover most of your big expenses like mortgage/rent or insurance, that leaves very little money for groceries or gas
Try to have a savings goal and save for that.
For example, don’t wait until the end of the month to spend all your money. This can help you save more money and have something left over at the end of the month.
Pitfall #2 – Forgetting Bills
Second, don’t forget to budget for bills and other expenses. Make sure you have enough money to cover your costs, especially those non-frequent bills like car registration.
By doing this, you’ll be able to ensure that you have enough money each week to cover what you need.
Pitful # 3 – Quit Bi-Weekly Budget Completely
Yep, I get it budgeting your paycheck over a 2-week budget is difficult. It may feel like pushing a square through a circle. It takes a different mindset and a little more planning to make it happen.
If anything, try to avoid impulse buys. Wait until the next paycheck and see if you still want the purchase. That will help you not to overspend on unnecessary items.
What to do when you have a third paycheck?
This is the BEST benefit of a biweekly paycheck. Twice a year, you will receive 3 paychecks in a month instead of just two.
Looking forward to having a third paycheck, you can either save it or spend it.
If you save it, you can use it as a down payment on a house or invest it in a retirement fund. If you spend it, you can use it to pay down debt, remodel a house, buy a new-to-you car, or go on a vacation.
There are a few things you can do when you have an extra paycheck:
Use it to pay down debt: If you have high-interest debts, using your third paycheck to pay them off can save you a lot of money in the long run.
Invest it: If you’re comfortable with taking on some risk, investing your extra paycheck could lead to bigger returns down the road.
Sinking Funds: Those yearly expenses can weigh heavily on your budget. So, set extra money aside for those payments.
Put the money towards your goals: Whatever your ambition is, here is money to help you get there faster.
Spend it on something fun: Obviously, this isn’t the smartest option, but if you’ve been working hard and deserve a little treat, go for it!
Just make sure that you’re not spending more than you can afford.
Free Printable Bi weekly Budget Templates
There are a number of different printable 2 week budget templates that can help you get your finances in order. Most of them are simple and easy-to-use, and they’re not scary to look at. In addition, many of them have templates that you can download and/or punch holes into so that you can use them as binders or notebooks.
One great option is the budget tracking worksheet. This cute template is simple yet effective, and it will help you track your spending each month.
How do you make a monthly budget with biweekly pay?
There are a couple of ways to make a monthly budget if you receive biweekly paychecks. You can either budget by paycheck, divide out your expenses between biweekly paychecks, or focus on a monthly budget.
If you choose to budget by paycheck, you’ll create a new budget for each pay period and then stick to it. This method gives you a better understanding of the flow of money in your bank account and will help you keep track of your bills more carefully.
The other option is to budget monthly, which is for people who live paycheck to paycheck. In this case, you would budget off 24 paychecks and make plans for your two budget paychecks. Then, two of your paychecks would be budgeted for the monthly budget.
However, many people argue the Budget-By-Paycheck method can help reduce stress since it allows for more flexibility.
In either case, it’s important that you track your spending throughout the month so that you can make adjustments as needed.
Time to Create Your Bi weekly Budget Calendar
This budget will be a little more complicated than your monthly budget because your paychecks are not always going to be paid on the same day of the month. However, most of your bills are usually fixed and don’t change from month to month.
So, you need to plot out which bills you will pay with each paycheck ahead of time in order to make sure you have enough money to pay them all and keep them organized.
It is important to remember that when creating your budget, you need to give yourself some grace to make sure it works for you while you work on perfecting your budgeting style.
For us, having a buffer of money in our “income checking” account takes away the stress of bills and anxiety that we will run out of money. We understand that we need to use sinking funds for those variable expenses.
However, it is important to note that a biweekly budget tends to forget events such as birthdays or vacations from being considered in spending plans. So, make sure to include them.
Now that you have a good idea of how much money you make and how much money you need to live comfortably, it’s time to start creating your biweekly budget.
Also, taking time to understand your personal financial statement is important.
From all of the free and paid budgeting apps, here are our top budgeting apps to check out!
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Mortgage rates are trending about the same across the board. Here are today’s average mortgage rates:
30-year fixed: 7.17%
15-year fixed: 6.33%
30-year jumbo: 6.89%
Current mortgage rates for June 2, 2023
*Data accurate as of June 1, 2023, the latest data available.
30-year fixed mortgage rates
Today’s 30-year fixed mortgage rate is 7.17%, which is lower than last week’s 7.35%, according to data from Curinos. This is an increase from last month’s 5.95%. Last year around the same time, 30-year fixed rates were 4.85%, which makes today’s rate much higher than it was a year ago.
At the current 30-year fixed rate, you’ll pay about $677 each month for every $100,000 you borrow — down from about $688 last week.
15-year fixed mortgage rates
The mortgage rates for 15-year fixed loans dropped today to 6.33% from 6.48% last week. Today’s rate is up from last month’s 5.35% and up from a year ago when it was 4.11%.
At the current 15-year fixed rate, you’ll pay about $862 each month for every $100,000 you borrow, down from about $870 last week.
30-year jumbo mortgage rates
The mortgage rates for 30-year jumbo loans dropped today to 6.89% from 6.93% last week. This is up from last month’s 5.79% and up from 4.50% last year.
At the current 30-year jumbo rate, you’ll pay around $658 each month for every $100,000 you borrow, up from about $660 last week.
Methodology
To determine average mortgage rates, Curinos uses a standardized set of parameters. For conventional mortgages, the calculations are based on an owner-occupied, one-unit property with a loan amount of $350,000. For jumbo mortgages, the loan amount is $750,000. These calculations assume an 80% loan-to-value ratio, a credit score of 740 or higher and a 60-day lock period.
Frequently asked questions (FAQs)
Mortgage rates are determined by a variety of factors, including the overall economy, inflation and the actions of the Federal Reserve. Mortgage lenders then set their loan rates based on these economic elements.
The rate you’re offered on a mortgage will also depend not only on the lender but also on your credit score, income, debt-to-income (DTI) ratio and other parts of your financial profile.
If you opt for a rate lock, you can typically do so for 30 to 60 days, depending on the lender. In some cases, you might be able to lock in your rate for up to 120 days.
Keep in mind that while some lenders allow you to lock in a mortgage rate for free, you’ll likely have to pay a fee for a longer lock period. This fee generally ranges from 0.25% to 0.5% of your loan amount. You could also be charged a fee if you want to extend the lock period — usually 0.375% of the loan amount.
There are several strategies that could help you qualify for the best mortgage rate, such as:
Checking your credit: When you apply for a mortgage, the lender will review your credit to determine your creditworthiness as well as your interest rate. In general, the higher your credit score, the lower your rate will be. So before you apply, it’s a good idea to check your credit to see where you stand. If you find any errors in your credit report, dispute them with the appropriate credit bureau to potentially boost your score.
Comparing lenders: Taking the time to shop around and compare your options from as many lenders as possible can help you find the best deal. In addition to rates, make sure to also consider each lender’s terms, fees and eligibility requirements.
Improving your credit score: If you have less-than-perfect credit and can wait to apply for a mortgage, it could be worth working to improve your credit beforehand to qualify for better rates in the future. Some possible ways to boost your credit include paying all of your bills on time and aiming to keep your credit utilization (the amount of credit you’ve used compared to your credit limits) on credit cards and lines of credit at 30% or less.
Reducing debt: Paying down debt could help lower your DTI ratio, which is how much you owe in monthly debt payments compared to your income. Having a lower DTI ratio can make you look like less of a risk in the eyes of a lender, which can result in a lower rate.
Choosing a shorter repayment term: Lenders typically offer lower rates to borrowers who opt for shorter terms. For example, you’ll likely get a lower rate on a 15-year mortgage compared to a 30-year loan.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
Jamie Young is lead editor of loans and mortgages at USA TODAY Blueprint who has been writing and editing for online media for 12 years. Previously, she worked for Forbes Advisor, Credible, LendingTree, Student Loan Hero, and GOBankingRates. Her work has also appeared on some of the best-known media outlets including Yahoo, Fox Business, Time, CBS News, AOL, MSN, and more. Jamie is passionate about finance, technology, and the Oxford comma. In her free time, she takes care of her two crazy cats and ever-growing collection of plants. You can follow her on Twitter @atjamie.
Megan Horner is editorial director at USA TODAY Blueprint. She has over 10 years of experience in online publishing, mostly focused on credit cards and banking. Previously, she was the head of publishing at Finder.com where she led the team to publish personal finance content on credit cards, banking, loans, mortgages and more. Prior to that, she was an editor at Credit Karma. Megan has been featured in CreditCards.com, American Banker, Lifehacker and news broadcasts across the country. She has a bachelor’s degree in English and editing.
MARSHFIELD, WI (OnFocus) – Credit scores are numerical ratings that lenders use to evaluate a borrower’s creditworthiness. They are calculated based on a variety of factors, including payment history, credit utilization, length of credit history, and types of credit accounts. The most commonly used credit score model is the FICO score, which ranges from 300 to 850. The higher the score, the more creditworthy the borrower is considered to be.
“When it comes to home-buying, credit scores play a significant role in determining whether a borrower will qualify for a mortgage and at what interest rate,” said Josh Kilty, Mortgage Loan Officer with Fairway in Marshfield. “Our experienced mortgage advisers have a keen understanding of the loans that will be the best fit for your unique situation. And one of the biggest factors in finding the loan most suitable for you is your credit score. Based on your credit score, you will be a candidate for some types of loans but not others.”
Credit scores and mortgages have been in the news a lot lately, due to LLPA’s.
Loan-Level Price Adjustments are fees that are added to the interest rate of a mortgage loan, based on various risk factors associated with the borrower and the property being mortgaged. These adjustments are determined by the mortgage investor or servicer and are typically applied to loans that do not meet certain criteria, such as having a lower credit score or a higher loan-to-value ratio.
For example, if a borrower has a credit score below a certain threshold or if the property being mortgaged is considered to be in a high-risk area, such as a flood zone or an area with high foreclosure rates, the mortgage investor may apply an LLPAs to the loan, which will result in a higher interest rate.
Loan-Level Price Adjustments can vary depending on the lender and the type of mortgage being offered, and they can significantly impact the total cost of the loan over time. It’s important for borrowers to understand the LLPAs associated with their mortgage loan and to shop around for the best loan terms and interest rates.
Fairway Mortgage professionals can help home-buyers navigate the credit score requirements for obtaining a mortgage. They can provide guidance on improving credit scores, such as paying bills on time, paying down credit card balances, and avoiding new credit applications. Additionally, they can help borrowers understand the different types of mortgage loans available and the specific credit score requirements for each.
Conventional Loans
These are loans not created by a government entity. Also known as conforming conventional loans, they simply “conform” to the guidelines put in place by Fannie Mae and Freddie Mac. A conventional loan also involves borrowing no more than $548,250. Minimum credit score: 620.
USDA Loans
Insured by the federal government, USDA loans are limited to certain “rural” areas. However, these areas are often near more urban areas. Since this loan is one of the few that requires no down payment, it is known for its affordability. Therefore, it tends to be popular among first-time buyers. Minimum credit score: None officially, but most lenders will require 640 or greater.
FHA Loans
Also backed by the U.S. government, FHA loans offer flexible qualification guidelines that help buyers who may not qualify for a conventional mortgage. This flexibility enables lenders to provide home loans with down payments as low as 3.5% of the purchase price. Minimum credit score: 580 (with 3.5% down).
VA Loans
The U.S. Department of Veterans Affairs (VA) provides this affordable home financing option for service members, veterans and their surviving spouses. Fairway’s minimum credit score for VA-loan eligibility is just 580 — less than the 620 required by many other lenders.
Jumbo Loans
Available for home purchases over $726,200 and up to $2,000,000, jumbo loans require a higher credit score than pretty much any other loan you’ll ever find. Minimum credit score: 680.
Credit scores are a crucial factor in the home-buying process, and Fairway Mortgage professionals can help borrowers understand and improve their credit scores to increase their chances of qualifying for a mortgage and obtaining favorable loan terms. If you’re concerned about your credit score being too low, ask your Fairway mortgage adviser for assistance.
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