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As unemployment numbers continue to rise, many employees are stressed about whether they’ll have a job next week or not.  Some have already, some have already lost their jobs and are scrambling to find new employment.   In this time financial planning is crucial.  This is a time when people are feeling and are desperately in need of guidance.  If you think that you are about to encounter a layoff,  you need to be focusing your attention on what can be controlled:  cutting expenditures, figuring out emergency funds, evaluating how to replace lost benefits, and making a game plan for the job search.

1. Save Emergency Cash

For those that are still employed but the future of their job is uncertain, I would encourage them to have at least 12 months of savings in cash.  Unfortunately many will not have enough.  But if they’re still employed and the emergency funds are not there, tapping into their 401(k) might be a viable option.  I know what you’re thinking.  Tapping into your 401k usually goes against all that I stand for.  And with this dismal market,  it might be a dangerous move, but;  if they become unemployed that option might now be available to them.

Typically if you’re still employed you’re allowed borrow up to half of your 401(k) balance, up to a maximum of $50,000.  Running these numbers you can guesstimate the period of how long you think it will take you to find a new job and then how much you would need to borrow to get you by until the new job is made.  If you borrow from your 401k while you are still employed then you avoid the 10% withdrawal penalty.  Sure there is some speculation in this move, but if you’re in a high demand field you may be able to use this move to your advantage.

Warning: If you do this, be sure to double check with your employer when you are due to pay it back.  It tends to vary from employer, but it could be due back immediately, within 60 days or some period greater.

2. Don’t Pay Off Debt

Another common misconception of after being laid-off is that most people want to take their savings or take their retirement savings and pay off debt, such as credit cards or even the 401(k) debt.  But in this type of market, paying off debt should not be the priority especially if you are unemployed.  The priority is to keep get your savings intact and making sure that you have plenty of cash on hand.  Sure credit card debt is bad, but just focus on making the minimum payment until you get your job situation in check.

3. Focus On Crisis Budgeting

If you’re used to going to shopping every weekend or eating out every other night at fancy restaurants, then most likely those changes are just around the corner. You need to sit down and seriously hammer out a budget of things that you need and things that you don’t need.

You may even consider working out two budgets, one for while you’re working and one for when you’re not working, so that way you can truly see how much you’re spending per month. And then, you can contemplate whether you can go on a cheaper cell phone plan, or cut your cable bill services. Sometimes adding that extra payment per month might not seem like a big deal, but $50 here and $50 there will surely add up, especially on a limited budget. Also, too, knowing which expenses you absolutely must be covered will help you realistically search for your future job.

4. Replace Lost Benefits

In the aftermath of a job loss, people should take stock of what benefits have been lost, which ones you are entitled to by law, and which ones may be portable.  how to continue health care coverage, especially if there are dependents.

Typically, employees are eligible to keep the same coverage through COBRA for at least 18 months. But, they may have to pay 102% of the cost of their insurance premium. If there premium have been subsidized by their employer, then that cost will be a rude shock.  COBRA can often be a good bridge choice, but it ends up being a health benefit. Families paying $200 a month for insurance under COBRA, it could be $1,000.  Luckily, the government just passed new law concerning COBRA benefits that qualifying period will be only responsible to pay for 35% of the benefit.  This comes at a time that should be very helpful to many that are facing layoffs ahead.

Many employers offer life insurance, long-term care insurance, disability policies and they may be portable as well. For another person or one who is not in good health, ability to take over the payments on existing $100,000 life insurance policy may save the worry of having to find another carrier. It’s better to keep it for a few months, although make sure they don’t need it, and drop it later.

5. Consider a Career Transition

Many people will be forced by an unforeseen job layoff to reassess what they want in their lives and what is meaningful to them. They may have to craft resumes, cover letters for the first time in years, and feel at a loss especially if they are switching to a new career path, which is an unfamiliar field.

If you haven’t jumped on the social media bandwagon, it’s time.  Consider Facebook, LinkedIn, Twitter and other social media sites to reconnect with old networks and also create new ones.  The more people that know your situation the better.   Also, consider starting a blog to showcase your talents. Need a good blog for inspiration?  Guess what, you’re already here.

by Steve Rhodes

Source: goodfinancialcents.com

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A senior couple walking together on a sunny day. The man is pushing a bicycle with a basket on it.

Nitat Termmee/Getty Images

There are a few different types of life insurance policies to choose from when you’re shopping for coverage. That includes whole life insurance, which is a permanent type of life insurance policy that remains in place for your entire life and guarantees a death benefit, as long as premiums are paid. But while whole life insurance can offer a number of unique perks, it may not be the best option for everyone. Before you make a decision on your life insurance coverage, it may benefit you to learn more about the pros and cons of whole life insurance, as well as how it works, in order to make the best choice possible for your unique circumstances.

Key takeaways

  • Whole life insurance is a permanent policy that remains in force for your entire life, as long as premiums are paid, and guarantees a death benefit.
  • Whole life insurance policies may cost two to three times more than term life insurance policies because of the expected payout.
  • Whole life insurance policies usually have a cash value component that you may be able to put towards premiums when enough funds accumulate.

What is whole life insurance?

Whole life insurance offers coverage for your entire life as long (in most circumstances) as you’re paying your premiums. In return, the death benefit is essentially guaranteed to be paid out to the beneficiaries in the event that the policyholder passes.

In addition, whole life policies include other benefits, like a cash value component, which is an account that accumulates funds over time. This account is funded by the policy’s premiums, which are what you pay to keep your policy active. As the policyholder, you can choose to borrow against the cash value component during your lifetime under certain circumstances.

How does cash value work?

The cash value component of a whole life insurance policy can be used in a variety of ways and has a few tax considerations to keep in mind. You may borrow against it, use it to pay premiums or make tax-free withdrawals, within policy limits. Withdrawals over the amount of the cash value may be considered taxable income and will reduce the death benefit amount that goes to your beneficiaries. Your beneficiaries will also not be able to access this cash value when you pass away, as it can only be used while you are alive.

Knowing how to leverage the cash value can be a useful tool. When you borrow against the cash value amount, you will not have to undergo a lengthy approval process from a bank or lender, and you will likely enjoy a lower interest rate. Borrowing against the cash value account may be the right fit for individuals in a pinch who want a loan with an easy approval process. Additionally, a loan against the cash value is not reported to credit bureaus, meaning it does not impact your credit score. Just remember that any amount that remains unpaid when you pass will likely be deducted from the death benefit total.

Best whole life insurance

Many regional and national life insurance companies offer whole life policies, so choosing the right one will require some research. Bankrate’s list of the best whole life insurance companies may be a great place to start your search. To determine this list, our insurance experts chose these providers based on the following considerations: customer satisfaction rankings from J.D. Power’s 2021 U.S. Individual Life Insurance Study, financial strength scores from AM Best, reported complaints from the National Association of Insurance Commissioners (NAIC), available coverage options and digital policy management tools.

The cost of whole life insurance

Generally, whole life insurance is more expensive than the same amount of term life insurance coverage. This is because whole life insurance policies are guaranteed to be paid out, as long as the policy remains in force and premiums are paid. As such, whole life policies might also come with a lower potential death benefit compared to a term policy.

However, whole life premiums remain stable and the policy comes with a cash value account, which policyholders can leverage for other financial needs. Your specific whole life insurance policy cost is determined by multiple factors, including the amount of coverage you choose, your age and your relative health.

Learn more: Affordable life insurance companies

Is whole life insurance worth it?

Some people may prefer whole life insurance because it remains in effect for the insured’s entire life and because the cash value component adds additional financial flexibility. However, these financial components also contribute to a higher rate compared to premiums associated with a term life insurance policy. Whether or not whole life insurance is worth it to you depends on your financial situation, budget and long-term goals.

On the other end of the spectrum, many people prefer the shorter-term coverage that comes with a term life policy. For instance, if you only want coverage for a limited amount of time — such as when your children are in school or while you still owe on a mortgage — you may want to apply for a term life insurance policy just for the period of time when the financial protection is most critical. Term policies are typically much more affordable, as a payout is significantly less likely to occur. If deciding between term life vs. permanent life insurance, knowing what your immediate and long-term needs are, budget and purpose for life insurance can help you make a choice.

Frequently asked questions

    • A whole life insurance policy comes with a cash value account that can be invested, but since it is considered low-risk the cash value is usually minimal. Whole life insurance policies are designed to provide loved ones with a death benefit after your passing, rather than to act as an investment vehicle. While the investment component of insurance can be a nice added perk to a whole life insurance policy, other forms of investment may generate higher returns. A financial advisor can help you determine whether or not a whole life policy is right for your situation, taking into account its investment component.

    • How much life insurance you need typically depends on your situation and the goals you have for your policy. You may also want to keep in mind your individual financial obligations when determining the amount of life insurance you need. For instance, if you have personal debt, a mortgage, or upcoming college tuition payments for your children, you may want to factor in those expenses. If you financially support someone into adulthood, such as a special needs family member, you may want to factor their living expenses into your life insurance coverage, as well. Typically, a licensed agent or certified financial professional can guide you in estimating how much life insurance you need, or you can use Bankrate’s life insurance calculator as a starting point.

    • You may have less need for life insurance coverage if you’re single and have no dependents, since this likely means that you have less people who would be financially at-risk if you were to pass away. However, some policyholders choose to purchase life insurance to pay for their funeral expenses, or to leave money to a favorite organization or charity.

      This is one reason single people may choose to obtain a term policy, which can typically be converted to a whole life policy ahead of the policy’s expiration when you may marry or have dependents in the picture. Obtaining a policy when you are young and in relatively good health may help you secure good rates for such a time when insurance becomes more critical.

Source: thesimpledollar.com

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Austin-based rent reporting fintech Boom announced on Wednesday that it has raised $4.5 million in a seed round to improve user experience, expand its product offerings and market its app to customers. 

The seed round was led by Chicago-based venture capital fund Starting Line, followed by Clocktower Technology Ventures, Company Ventures, Gilgamesh Ventures, and Plaid co-founders William Hockey and Zachary Perret. This latest round of funding follows a $800,000 pre-seed round. 

“We’re gonna do three things with the resources: improve the core product of rent reporting; launch a couple of new products in the pipeline; and go to market, as we haven’t done any consumer and landlord marketing,” Rob Whiting, CEO and co-founder, said in an interview.  

Boom’s app was launched in late 2021 to allow users to build credit using rent payments, which are typically their largest monthly expense. Boom reports the information to the three credit bureaus: Experian, Equifax and TransUnion. 

Subscribers pay $24 a year for the app services, and customers link the app to their bank accounts so that the rent payments will be verified every month. While Boom does not work with users that have “handshake” rent agreements, it can verify whether customers pay rent to a relative, friend or roommate by checking wire transfers and the lease agreement, for example.   

According to the company, users see an average increase of 28 points to their credit scores within two weeks of using the app when making their rent payments accordingly. The company says it’s offering its core product at a price 70% lower than its competitors. 

Boom says it has between 15,000 and 20,000 subscribers and has attracted partnerships with major industry players such as Progressive, Apartment List, and national property management companies.

On-time rent payments have become another piece of the mortgage underwriting process in the U.S. over the last two years. 

In September 2021, Fannie Mae incorporated customers’ rent payments into its underwriting system, known as Desktop Underwriter. Freddie Mac adopted the same initiative in June 2022. 

A study by the Urban Institute found that Black households have the most to gain by including rent payments in mortgage underwriting.

Source: housingwire.com

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What is a bank holiday?

A bank holiday is when banks are closed on a business day in observance of a federal or local holiday. There are typically 11 federal bank holidays per year in the United States.

How do bank holidays work?

When a bank is closed for a holiday, branches and remote customer service options — such as customer service by phone or live online chat — are unavailable until the next business day. If the holiday falls on a Sunday, the bank will usually be closed on Monday. Online banking will typically still be available during the bank holiday, but it will be self-service.

List of bank holidays in the U.S. in 2023 and 2024

You may want to check your bank’s holiday closure schedule — especially if your bank operates internationally — but here are the typical bank holidays observed in the United States according to the Federal Reserve.

2023 Dates

2024 Dates

New Year’s Day

Jan. 1 (observed Jan. 2).

Martin Luther King Jr. Day

Washington’s Birthday

Memorial Day

Juneteenth

Independence Day

Columbus Day

Veterans Day

Nov. 11 (observed Nov. 10).

Thanksgiving

Does money go out on a bank holiday?

If you have an electronic payment that might be delayed by a bank holiday — such as a direct deposit, online payment or money transfer — you may need to plan to pay for something early. For example, if your rent is due on a particular day of the month, look ahead to any bank holidays that might disrupt your payment and try to schedule your payment accordingly. Sometimes your employer or bank might also send your paycheck before a bank holiday.

How to access your money during a bank holiday

Even if your bank’s branches and customer service phone lines are closed during a bank holiday, you can still typically access your money online and through your bank’s ATM network. Most banks allow their customers to manage their money with a mobile app or by logging in to their accounts on a computer. You can send money through Zelle if your bank offers that service, transfer money to other accounts and make bill payments online, and you can use ATMs to withdraw and deposit cash.

Source: nerdwallet.com