The words frugal, self-discipline, coupons, emergency funds and monthly budgets come to mind when you think about one income families.  When you decide to switch from two incomes to one your whole lifestyle changes and every expense needs to be examined and possibly cut.  But are there budget items you definitely should not skimp on?  Here are a few things I would not recommend cutting from your budget.

Estate Planning

Having a will, health care directives and Powers of Attorney are imperative – especially if you have children.  Too often, parents of young children neglect or postpone estate planning, saying they are too young, quite healthy, or cannot afford the expense.  Another reason may be that estate planning deals with feelings and attitudes that people often prefer to ignore.  Estate planning lets parents plan for care of their children, ensures their property will be transferred to the desired individuals, determines who should handle the business affairs of the estate, and determines who will handle the children’s property.

Health Insurance

Not having health insurance is one of the fastest ways to find your family in financial trouble.  One accident or significant illness without coverage can leave you holding hundreds of thousands of dollars in medical bills if you are not careful.  If insurance is not offered by your employer or you are self-employed, check into purchasing an individual policy.  While it may not be cheap the fact remains; what do you have if you don’t have your health?

Property Insurance

A house is usually a family’s greatest asset, so it is mandatory to have homeowners insurance when you have a mortgage. For many people this insurance premium is built into the mortgage payment.  If you can, pay extra for guaranteed-replacement coverage, which mandates that the insurer will replace your home if it is destroyed, regardless of the cost.  If you rent instead of own, a renter’s insurance policy is just as important.  In the event of a burglary, fire or disaster you should be able to at least have a policy that can cover most of the replacement costs.

Car Insurance

If you have an automobile you need car insurance; there is no way around this.  Not only is it required by the law, but it can also help to keep your finances safe.  Like a home, automobiles can be quite expensive and if your vehicle gets damaged you want to be able to repair or replace it. Most automotive insurance policies cover bodily injury or death of another person in an incident that you are legally responsible.  A policy generally pays for medical expenses related to the incident and legal defense costs.  Look for coverage of at least $100,000 per person, another $100,000 for property and $300,000 per accident.

Life Insurance

Your life is valuable because it is what allows you to work and earn an income to provide for your family. At the very least you should have enough life insurance to cover basic funeral expenses and provide a cushion for your family, and at most it should provide a stream of income for your family that can replace what is now gone.  Many employers offer a basic life insurance as a benefit and some even allow you to purchase additional coverage at a very affordable rate.  Outside of employer plans there are hundreds of insurance companies that can provide the right coverage for you.  Also consider taking out life insurance on the parent staying at home.  Should he or she die, the death benefit could cover the hefty expense of child care.

Disability Insurance for Working Spouse

Long term disability insurance is something that a lot of people do not think about. After all, most people have the “it won’t happen to me attitude.”  But a long term disability insurance policy can help to make sure that you can continue your current lifestyle even your family’s working spouse is injured.  You can choose to purchase long-term disability insurance that does not start until you have been disabled for over six months in an effort to save money on your premiums, but of course this assumes that you have a fully funded emergency fund in place to cover your family until then.

This article was a guest post from Adam Obrecht, CFP®, AO Wealth Advisory.

Adam Obrecht, CFP® is the owner and founder of AO Wealth Advisory in Waukee, Iowa.  His life passion is helping individuals, families and businesses maximize what they earn, invest wisely, and give generously to their family, charities, and community.  www.aowealthadvisory.com

Guest

My father taught me how to prune trees. You find where you want to cut and you look for that fork in the branch. That is where you cut. No hack and slash, no indiscriminate chainsaw running here (even though that sounds like a lot of fun). To prune correctly you had to take the time and envision where you wanted the tree to grow.

Budgets are a lot like that. Think of all the categories as main branches and your income as the trunk. Each dollar grows off those branches and can be very useful producing a variety of different fruit. Sometimes though, a branch can start growing the wrong way and needs to be pruned and grafted onto a different main branch.

Recently my wife and I found several branches that needed pruning:

Branch # 1 – The cell phone plan

We love our cell phones! We love our social networking too (or at least I do). Problem is we were spending too much time checking our phones for the latest status update. For me it was becoming a very bad habit. When our internet at home went up after the promotion we were on expired, we knew we had to change some things around.

Our cell company, Koodo, here in Canada offers unique ways to change our details around, without getting into a longer contract. We analyzed our habits and decided that we needed to get a lower amount of minutes for both of us, with unlimited incoming calls, and unlimited texting. The data plans were cut because they weren’t necessary. We have WiFi in the house and in the majority of places we go; thus able to connect if we have to.

The result? We went from around 120 dollars a month to around 80 dollars a month. That is a savings of 40 dollars! Exactly what needed to be transplanted to the internet bill.

Branch # 2 – Car Insurance

I started thinking about the car I have and realized that it is decreasing in value. The deductible on the collision insurance I would pay would be just about the value of the car. I also could do without the car if I absolutely had to get rid of it (ie. Got in an accident that totaled the car). I made a call and took collision off.

Now I must caution you: This step is only if you are willing to pay for collision damage out of your own pocket, or if you don’t mind that you have a bumper missing, or something like that. It also depends on how good of a driver you are too.

Being the owner of this car means that I was willing to take the risk and save 30 dollars a month on car insurance.

Branch # 3 – Groceries

This branch is one that you have to look long and hard at. What kind of food do you buy? How much of it is junk food? What are items that can stretch longer during the month? How do you eat right on a small budget?

My wife has discovered the answer to a few of these questions for our little family. She sits down with her recipes and makes a monthly menu. Her first step is to take inventory of what we have on hand and try to incorporate that into the menu. Then she goes through her recipes and makes a menu that she breaks down into ingredients. Those ingredients are made into a shopping list. The initial shopping list for the month is a long one for most of the staples needed for most of the recipes. After the first list is made, she makes a weekly list for fruit, veggies and milk.

Our monthly menu looks similar to this menu.

I am very proud of my wife and the work she takes to trim the groceries branch. Last month she managed to trim 20 bucks off. We rolled that over into the next month so that we could buy an extra case of chicken and I imagine that we’ll keep rolling over the extra amounts for more of the on hand staples. However, I do foresee a month where we don’t have to buy a large amount of food and that’s where the savings will show up and be applied to another category.

Last Thoughts . . .

Cutting expenses is hard, but worth it. When the day comes and we are debt free, some of these categories will be funded to the max and we will have some wiggle room. Right now, though, we are intense on getting out of bondage and into financial freedom!

If you have recently pruned some categories, please share with us in the comments.  We all can use suggestions!

JC Reagan

JC is a writer over at God, My Weird Spouse, and I, where he writes about life, marriage, and God’s place in all of it. He believes that being weird is a good thing in this world of mediocrity. He and his wife want to stick out for strong marriages and the priority of God, as well as a Biblical worldview.

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A statement released yesterday from The White House reveals that Democrats and Republicans have reached an agreement on exactly how to extend the tax cuts. While both sides agreed that tax cuts for the middle class were necessary to maintain economic stability, differing opinions on cutting tax for the wealthiest Americans surfaced.

Two Sides Compromise

Obama is of the persuasion that government should only extend tax cuts for the middle class. The GOP argues that tax cuts should be maintained for not only for the middle class, but for the wealthiest Americans as well. Obama explains his position below:

Now, there’s no doubt that the differences between the parties are real and they are profound.  Ever since I started running for this office I’ve said that we should only extend the tax cuts for the middle class.  These are the Americans who’ve taken the biggest hit not only from this recession but from nearly a decade of costs that have gone up while their paychecks have not.  It would be a grave injustice to let taxes increase for these Americans right now.  And it would deal a serious blow to our economic recovery.

Now, Republicans have a different view.  They believe that we should also make permanent the tax cuts for the wealthiest 2 percent of Americans.  I completely disagree with this.  A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit.  And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy.

The Republicans are convinced that tax cuts should be equal in proportion across the board. Their argument is that the wealthy should not be punished for accruing cash and assets through hard work. While I agree with this, Obama does make a strong counterargument that extending tax cuts to the wealthy does not help with the federal deficit:

. . . I’m not about to add $700 billion to our deficit by allowing a permanent extension of the tax cuts for the wealthiest Americans.

Obama did, however, allow a temporary extension of the tax cuts for the wealthy in exchange for the ability to extend unemployment insurance and allow for tax cuts for small businesses:

And I won’t allow any extension of these tax cuts for the wealthy, even a temporary one, without also extending unemployment insurance for Americans who’ve lost their jobs or additional tax cuts for working families and small businesses — because if Republicans truly believe we shouldn’t raise taxes on anyone while our economy is still recovering from the recession, then surely we shouldn’t cut taxes for wealthy people while letting them rise on parents and students and small businesses.

Americans Need To Sacrifice Lavish Lifestyles

We’re at a time in our history where ideals can clash with reality. Ideally, we all would like to maintain the lifestyle we’ve all grown accustomed to: tax cuts, unemployment benefits, and general government assistance. But I’m afraid that none of these things can remain active in the long term. The fact of the matter is that our nation is in increasing debt. We owe, we owe, we owe.

While we have a good deal of control who we put in Washington, we have greater control of ourselves. It’s time that we stop expecting tax cuts, government assistance, and our President to save the day. It’s time we take control over our own lives and live responsibly.

Whether we like it or not, America will have to make many sacrifices to get governmental spending under control. We soon won’t be able to afford to pay for those who aren’t working. We soon won’t be able to carry the burdens of those who have even legitimately lost their jobs and need assistance. This is why I’ve dedicated myself to learning to be self-sufficent to the greatest extent possible. I’m refusing to believe that I can be successful in only one endeavor. Multiple streams of income are becoming more and more important.

Read More Details

For more information on the details of the extension of the tax cuts and other deals that were made, please read my friend Peter’s article at BibleMoneyMatters.com: Deal Reached Between President Obama And GOP On Extension Of Bush Tax Cuts.

What are your thoughts on the tax cuts or the ever increasing federal debt? Leave us a comment below!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Building a financial foundation is a lot like building your own custom vehicle – you have to have the right components. Everything must be working together in unison to get you where you want to go. Each part is important. Each part is essential. The only trouble is where to begin.

I’m going to attempt to list some of the most crucial components for you. All you have to do is rearrange them in the order that best fits your current situation.

A Few Core Components of your Financial Vehicle:

Click one below to learn more:

• Emergency Fund
• Monthly Budget
• Widespread Insurance
• Strong Income
• Debt Elimination
• Sound Investments
• Unconditional Contentment
• Joyful Giving
• Transparent Communication

These are only a few of the core components you need, but they are some of the most important. Some components will be more important during certain times than others. If you have a baby on the way, build up that emergency fund! Got a fat car payment? Discover more money by paying it off!

Throughout the years, you’ll be able to fine-tune your vehicle to travel faster than you ever imagined. Keep these areas ever-healthy, and you’ll avoid the wrecks that can lead to you financial ruin. Start your journey by reading a few classics from The Christian Dollar above.

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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What do you think of all these changes? I’ll meet you in the comments!

Special thanks to HealthInsuranceProviders.com for developing this info-graphic.

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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If you didn’t get a chance to watch Obama at the White House Health Care Summit today, you may want to check out some of the key quotes from the event if you’re pressed for time. If not, watch the video below!

The meeting was very polarized and heated. It did seem that Democrats and Republicans were trying to bridge the gap, but much more work is required.

As always, let me know your thoughts! Let’s talk about it!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Too often, people become overwhelmed when they are trying to revise their financial situation. They know they need insurance, an emergency fund, to pay off debt, and to create a budget. What they don’t understand is that these things come with time, not all at once. Burdened by all the financial tasks they know they should be accomplishing, they quit before they even start.

I just wanted to give you a few words of encouragement. You don’t have to start everything at once. All you have to do is constantly be learning and focus on it one step at a time. The power of focus should not be underestimated.

For example, we recently focused all our attention to debt reduction. We are almost debt-free (except our mortgage) and will move on to building up our emergency fund after that. I truly believe that by solely focusing on our debt reduction allowed us to push harder towards the goal of being debt-free.

Try creating a written game plan. Give yourself a few steps and due dates. There’s no need to do everything at once. Just make sure you are constantly focused on your goal at hand. My belief is that you’ll get more than you could get done otherwise.

Your thoughts?

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Over the past month, I’ve spoken with two people who have had their identities stolen. It took them years to recover from the financial damage and regain their good names. Identity theft is becoming more common as the era of information infiltrates our society. Privacy is being intruded upon electronically and through mass mail that contains ever-so-sensitive information.

The FTC estimates that about 9 million Americans have their identities stolen each year. You probably know someone who has had their identity stolen! Identity theft is real. It can happen to you. I’m not asking that you become paranoid, I’m asking that you become prepared. The faster you get identity theft insurance the better. In this article we’ll discuss the various levels of identity theft and what you can do about it. Some solutions are very low cost. You may be surprised!

What are some common ways my identity can be stolen?

These points are from the FTC:

1. Dumpster diving. Thieves will go through your trash looking for credit card numbers and other personal information. Be sure to buy a shredder and destroy any personal documents you have. Especially destroy any credit card offers you receive by mail.
2. Skimming credit cards. When you’re not looking, crooks will swipe your card in a specialized information storage device designed to steal your number. Try to keep your credit card in sight at all times.
3. Phishing. This is when an individual poses as a company online, by phone, or otherwise to obtain your personal information. Do not give out personal information unless you are 100% sure who you are dealing with.
4. Changing your address. Your information can be stolen by redirecting it without you even knowing.
5. Stealing. If your purse or wallet is stolen, it can result in identity theft very quickly. Be sure to keep a list of phone numbers for your bank and other institutions you can contact if this happens to you.
6. Pretexting. This happens when a person contacts financial institutions or phone companies to obtain your personal information. If they are clever enough, they can pose as you and take your identity.

What should I look for when shopping for identity theft insurance?

There are three important elements to consider when you purchase identity theft insurance:

• Prevention: The company needs to take proactive measures to ensure your identity isn’t being stolen. There is not a company out there that can guarantee your identity won’t be stolen, but you need to make sure they are staying on top of things.
• Recovery help: The company needs to ensure that they will help you manage the recovery process if your identity is stolen. This includes providing you with an identity theft specialist who guides you through the process and fills out necessary paperwork to get you back on track.
• Reimbursement: The company needs to reimburse you for a reasonable amount of expenditures related to your stolen identity. For example, they need to cover legal fees and charges.

How much should identity theft insurance cost?

I’ve found the range to be anywhere from $80 to $200, depending if an individual or family is covered. Some popular companies are Lifelock and Zander Insurance.

Remember to shop around and you may find some great deals. Run the company past the Better Business Bureau to make sure they are a trusted name.

Identity theft can happen at any time. Have you been a victim of identity theft? Looking forward to your thoughts in the comments below.

“Insurance Essentials: Identity Theft Insurance” is part of a series onInsurance Essentials: An Introduction To Insurance You Need! I encourage you to read more articles on insurance. I’d also appreciate your comments below so that I might improve this article accordingly. Thank you for your help!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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If your home goes up in flames, the last thought you want to go through your mind is: “I should’ve had more insurance.” Reading and hearing home insurance issues in preparation for this article has made me more aware that we probably need more coverage than we have. Here are a few things I’ve learned along the way, and I’m looking forward to any stories out there of those of you who’ve been through a home disaster.

How much homeowners insurance should I carry?

For the longest time, I thought that we should only carry what we deemed to be appropriate when weighed against risk. Now, I’m leaning on the side of taking the ultimate precaution: covering your home up to the value of it. It is very possible for a home to burn down fully; what makes some people think that it can’t happen to them? Of course it can!

Losing your home in a fire can utterly destroy your financial future if you don’t have insurance to protect it. Think about it! Your home is probably the most expensive investment you have. Losing your home can set you back decades. You don’t want that to happen to you!

How high should my deductible be?

That depends on what you can afford. If you have an emergency fund of 3 to 6 months of expenses in the bank, consider a higher deductible. You’ll save some money on the premium. If you don’t have an emergency fund of sufficient nature, lower your deductible. You also may want to lower your deductible if you can find good value in doing so.

What should I avoid when shopping for homeowners insurance?

First, avoid policies that don’t guarantee complete replacement cost. Although the premiums are more expensive, you won’t have to remember to increase your insurance year over year as the value of your home goes up. Modern homeowners insurance policies only cover up to a specified amount of the policy plus, say, 20%. For example, if you buy a home at $100,000 and have $100,000 of coverage, your policy will only cover you up to $120,000. Let’s say that in 7 years your home is valued at $150,000. If it were to burn down, you would be covered up to $120,000, not $150,000, resulting in a loss of $30,000.

Again, avoid underinsuring. Your homeowners insurance is perhaps one of the most important pieces of insurance you can carry. You don’t want to lose your hard-earned dollars to a catastrophe.

What if I’m renting?

In that case, your landlord should have homeowners insurance. You would be responsible for insuring any valuables on the property. I have heard first hand of tenants losing electronics and jewelry from theft. Don’t be disillusioned. Your landlord probably isn’t insuring your valuables. You need to make sure that you have these things covered if they are of value to you.

Homeowners and renters insurance is very affordable. Build it into your budget and make sure you are completely covered when it comes to your home and property.

“Insurance Essentials: Homeowners or Renters Insurance” is part of a series on Insurance Essentials: An Introduction To Insurance You Need! I encourage you to read more articles on insurance. I’d also appreciate your comments below so that I might improve this article accordingly. Thank you for your help!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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Okay, so you’re young, healthy, and full of life. Why worry about long-term care insurance? Well, it’d be a good idea to start thinking about it if your parents are getting up there in years! Simply recognizing that someone in your family might need long-term care insurance and talking with them about it can save you hundreds of thousands of dollars.

A couple can spend their entire lives building up their retirement account and making sure that they are financially healthy, only to lose it to Alzheimer’s or another long-term illness that ends up costing them their entire nest egg. It happens all across the world more often than you think. Long-term care insurance will pick up where health insurance or disability insurance leaves off.

Who really needs long-term care services?

The American Association of Home and Services for the Aging has stated that most people over the age of 65 will need long-term care services. As you can imagine, the cost for these services is sky-high. It would likely demolish any savings you have within a matter of a few years if not less.

When should I buy long-term care insurance?

The probability of you needing long-term care before the age of 60 is slim. The chances skyrocket after age 60. Nobody over the age of 60 should be without it, even if they think they won’t need it because of their wealth. Protect your wealth and buy it at 60.

Can’t we just use Medicaid?

Only if you are broke! Some people move assets out of their parent’s names in order that they will qualify for Medicaid – but this is a federal crime. It’s not only morally wrong, it is illegal. Besides, who wants to depend on the government for their health care?

Isn’t coverage expensive?

Yes, it is. But the benefit is amazing. Ratio-wise, you’re getting a good return for your premiums. It’s worth every penny. I’ve gotten a few example quotes and found it to be reasonable. In order to afford long-term care insurance, you must have a strong income. That’s why it is so important be smart with your money while you are young so when you are old you can be covered.

Be sure to shop around for the best coverage for you or your parents. Make sure your family is all on the same page. It’s very difficult to have the conversation about long-term care insurance with your family, but very necessary. If your parents can’t afford long-term care insurance, it would be wise to buy it for them if you can. Remember, their financial problems can quickly become your financial problem. Don’t let them go without this valuable type of insurance.

“Insurance Essentials: Long-Term Care Insurance” is part of a series on Insurance Essentials: An Introduction To Insurance You Need! I encourage you to read more articles on insurance. I’d also appreciate your comments below so that I might improve this article accordingly. Thank you for your help!

John

John officially launched TheChristianDollar.com on January 1st, 2010 with the intention to provide an excellent financial resource for biblically-minded individuals and families. Influenced heavily by Dave Ramsey, John started researching how he might better handle his money and help others in the process. John enjoys reading, writing, playing with gadgets, and spending time with his wife Courtney.

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