Best Finance Articles

Small business insurance is frequently a necessity, not
an option. As a business owner, you will have many
choices, some far better than others. Becoming an
educated business consumer about insurance will pay
big dividends.  

Buying business insurance is among the best ways to prepare for the unexpected. Without proper
protection, misfortunes such as the death of a partner or key employee, embezzlement, a lawsuit, or a
natural disaster could spell the end of a thriving operation.

Ranging from indispensable worker’s compensation insurance to the relatively obscure executive
kidnapping coverage, insurance is available for nearly any business risk. Considering the multitude of
available options, business owners must carefully weigh whether the cost of certain premiums will justify
the coverage for a given risk.

General Liability
Many business owners buy general liability or umbrella liability insurance to cover legal hassles due to
claims of negligence. These help protect against payments as the result of bodily injury or property
damage, medical expenses, the cost of defending lawsuits, and settlement bonds or judgments required
during an appeal procedure.

Product Liability
Every product is capable of personal injury or property damage. Companies that manufacture,
wholesale, distribute, and retail a product may be liable for its safety. Additionally, every service
rendered may be capable of personal injury or property damage. Businesses are considered liable for
negligence, breach of an express or implied warranty, defective products, and defective warnings or
instructions.

Home-Based Business Insurance
Contrary to popular belief, homeowners insurance policies do not generally
cover home-based business losses. Commonly needed insurance areas for
home-based businesses include business property, professional liability,
personal and advertising injury, loss of business data, crime and theft, and
disability.

Internet Business Insurance
Web-based businesses may wish to look into specialized insurance that
covers liability for damage done by hackers and viruses. In addition,
e-insurance often covers specialized online activities, including lawsuits
resulting from meta tag abuse, banner advertising, or electronic copyright
infringement.

Worker’s Compensation
Required in every state except Texas, worker’s compensation insurance
pays for employees’ medical expenses and missed wages if injured while
working. The amount of insurance employers must carry, rate of payment,
and what types of employees must be carried varies depending on the state.
In most cases, business owners, independent contractors, domestic
employees in private homes, farm workers, and unpaid volunteers are exempt.

Criminal Insurance
No matter how tight security is in your workplace, theft and malicious
damage are always possibilities. While the dangers associated with hacking,
vandalism, and general theft are obvious, employee embezzlement is more
common than most business owners think. Criminal insurance and employee
bonds can provide protection against losses in most criminal areas.

Business Interruption Insurance
Some businesses may wish to acquire insurance that covers losses during
natural disasters, fires, and other catastrophes that may cause the operation to shut down for a
significant amount of time.

Key Person Insurance
In addition to a business continuation plan that outlines how the company will maintain operations if a
key person dies, falls ill, or leaves, some companies may wish to buy key person insurance. This type of
coverage is usually life insurance that names the corporation as a beneficiary if an essential person dies
or is disabled.

Malpractice Insurance
Some licensed professionals need protection against payments as the result of bodily injury or property
damage, medical expenses, the cost of defending lawsuits, investigations and settlements, and bonds
or judgments required during an appeal procedure.

By Michele Dawson

Although the thought of paying a mortgage is more enticing than paying rent, it’s important to understand all the costs involved in buying and owning a home as you determine whether you can afford to join the ranks of homeowners.
Potential buyers sometimes forget to factor in the down payment, homeowners insurance and the possibility of depreciation, as well as the costs associated with closing the transaction, moving, purchasing major appliances, and home, landscape and pool maintenance, not to mention furnishings and design accessories once you move in.
The days of calling up the landlord to fix your problems come to an abrupt halt when you’re a homeowner. You’ll be responsible for everything from malfunctioning appliances to leaky faucets to broken heating and air conditioning units and everything in between. And if you buy an older home, you’ll probably eventually encounter costly repairs, such as replacing the roof or windows.
To determine whether you can afford to buy a home, you should do the following:
1. Determine the property value of homes that interest you. The property value (what the home is worth) is determined by comparing the prices of homes recently sold of similar size in the same neighborhood. Your real estate agent will be able to provide this information to you.
2. Review different mortgage loan types and compare their required down payment amounts to the money you have available. Down payments, based on a percentage of the value of the property and determined by the type of mortgage you select, typically range from three to 20 percent of the property value. Don’t forget to factor in private mortgage insurance, a policy that allows mortgage lenders to recover part of their financial losses if a borrower fails to full re-pay a loan. Mortgage insurance makes it possible to buy a home with as little as 3 percent down. Usually, the lower the down payment, the higher the PMI, which typically will cost somewhere between $40 and $125 a month.
3. Get an estimate of your closing costs, including points (the dollar amount paid to a lender for obtaining a lower interest rate on a loan—one point is one percent of the loan amount), taxes, recording, inspections, prepaid loan interest, title insurance (a policy that insures a home buyer against errors in the title search; cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller) and financing costs from your mortgage lender or a real estate professional. These will generally add up to between 2 and 7 percent of the property value. You’ll receive an estimate of these costs from your lender after you apply for a mortgage.
4. Add the down payment requirements and the closing costs together to determine the amount of money you’ll need right off the bat. But you’re not done yet.
5. Think about the actual move. Will you hire a moving company or rent a truck? Either way will cost you. The more stuff you have, the more it will cost.
6. Property taxes. Many lenders will require an impound account in which monthly payments for property tax (and often insurance) are paid together with the monthly mortgage payment. You can figure your average annual tax rate will be about 1.5 percent of the purchase price of your home.
7. Next, budget for maintenance and repairs. HouseMaster, a home inspection company with 300 franchises nationwide, said that based on a study that evaluated 2,000 inspection reports, the typical costs of major repairs are:
•Roofing: $1,500 to $5,000
•Electrical systems: $20 to $1,500
•Plumbing systems: $300 to $5,000
•Central cooling: $800 to $2,500
•Central heating: $1,500 to $3,000
•Insulation: $800 to $1,500
•Structural systems: $3,000 to $1,500
•Water seepage: $600 to $5,000
Once you crunch the numbers and find you come up a bit short, investigate ways to reduce or creatively fund your down payment—it can come from a variety of sources. Check with your realtor or lender to find out what’s available.
You’ll also need to factor in the cost of homeowners insurance. In addition to the type of construction, age of the home, your credit history and past insurance history, new issues like litigating costly toxic mold cases are raising homeowners insurance rates.
In fact, the National Association of Insurance Commissioners reports that homeowners will spent an average of $822 on homeowners insurance in 2007, the last year data was available.
In your final analysis of whether you can afford to buy a home, you’ll want to weigh the costs with the financial benefits—a consistent mortgage payment (unlike rent, which can increase), the tax benefits (you can deduct, in most cases, mortgage interest, closing costs, and property taxes), and the all-important appreciation factor—the rate of increase in a home’s value.
And of course, you’ll want to weigh perhaps the biggest benefit of all—having a place to call your own.

Small business insurance is frequently a necessity, not
an option. As a business owner, you will have many
choices, some far better than others. Becoming an
educated business consumer about insurance will pay
big dividends.  

Buying business insurance is among the best ways to prepare for the unexpected. Without proper protection, misfortunes such as the death of a partner or key employee, embezzlement, a lawsuit, or a natural disaster could spell the end of a thriving operation. Ranging from indispensable worker’s compensation insurance to the relatively obscure executive kidnapping coverage, insurance is available for nearly any business risk. Considering the multitude of available options, business owners must carefully weigh whether the cost of certain premiums will justify the coverage for a given risk. General Liability Many business owners buy general liability or umbrella liability insurance to cover legal hassles due to claims of negligence. These help protect against payments as the result of bodily injury or property damage, medical expenses, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure. Product Liability Every product is capable of personal injury or property damage. Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Additionally, every service rendered may be capable of personal injury or property damage. Businesses are considered liable for negligence, breach of an express or implied warranty, defective products, and defective warnings or instructions. Home-Based Business Insurance Contrary to popular belief, homeowners insurance policies do not generally cover home-based business losses. Commonly needed insurance areas for home-based businesses include business property, professional liability, personal and advertising injury, loss of business data, crime and theft, and disability. Internet Business Insurance Web-based businesses may wish to look into specialized insurance that covers liability for damage done by hackers and viruses. In addition, e-insurance often covers specialized online activities, including lawsuits resulting from meta tag abuse, banner advertising, or electronic copyright infringement. Worker’s Compensation Required in every state except Texas, worker’s compensation insurance pays for employees’ medical expenses and missed wages if injured while working. The amount of insurance employers must carry, rate of payment, and what types of employees must be carried varies depending on the state. In most cases, business owners, independent contractors, domestic employees in private homes, farm workers, and unpaid volunteers are exempt. Criminal Insurance No matter how tight security is in your workplace, theft and malicious damage are always possibilities. While the dangers associated with hacking, vandalism, and general theft are obvious, employee embezzlement is more common than most business owners think. Criminal insurance and employee bonds can provide protection against losses in most criminal areas. Business Interruption Insurance Some businesses may wish to acquire insurance that covers losses during natural disasters, fires, and other catastrophes that may cause the operation to shut down for a significant amount of time. Key Person Insurance In addition to a business continuation plan that outlines how the company will maintain operations if a key person dies, falls ill, or leaves, some companies may wish to buy key person insurance. This type of coverage is usually life insurance that names the corporation as a beneficiary if an essential person dies or is disabled. Malpractice Insurance Some licensed professionals need protection against payments as the result of bodily injury or property damage, medical expenses, the cost of defending lawsuits, investigations and settlements, and bonds or judgments required during an appeal procedure. Courtesy of the U.S. Small Business Administration.

Debt consolidation, home equity loans, credit counseling, debt management plans, even Chapter 13 bankruptcy — it doesn’t matter which of these debt programs you’re talking about. They all suffer from one fatal flaw, the number one problem that causes most people to fail at eliminating their debts through these techniques. Can you guess the problem?

It’s probably not what you’re thinking. It’s not the fees, interest rates, or the quality of the companies behind these debt solutions. No, the number one problem with most debt programs is that they require FIXED monthly payments without exception. This major flaw is the main reason that very few people make it through a credit counseling program or a Chapter 13 bankruptcy plan.

Do you make exactly the same amount of money each and every month? If you are like most people, the answer is probably NO. It’s easy to understand why. Salespeople, for instance, often experience ups and downs based on how much commission they earn from one month to the next. Seasonal workers experience boom and bust times depending on the time of the year (think retail workers getting lots of overtime around the holidays). Overtime hours come and go depending on company workloads. Part-time jobs may offer hours that vary widely from week to week. And so on.

Now, what about your expenses? Do you spend exactly the same amount of money each and every month? Sure, your mortgage or rent and your car payments are a set amount each month. But doesn’t your utility bill go up and down depending on the weather? What about your phone bill? How much will you spend on car repairs over the next 6 months? Medical bills? Dental bills? Can you predict such variable expenses with any accuracy?

If you have lots of room in your budget, with money left over at the end of the month, then fluctuating income and expenses are probably not a major issue for you. However, if you are struggling to make ends meet, living from one paycheck to the next, then an unexpected expense can destroy your monthly budget.

People enter debt relief programs with the best of intentions. Take credit counseling, for example. You enter a program to get some help in bringing your credit card debts under control. The monthly payment of $500 sounds good. You’re humming along just fine for a few months, then wham! The water heater blows up. Time to shell out $800 for a new one. Unless you like cold showers, you’ll need to skip the $500 payment to the agency this month, and part of next month’s payment as well. Where does that leave you with the credit counseling program? Back on the street, that’s where. You simply CANNOT miss payments into that type of plan and expect anything but failure.

Or look at Chapter 13 bankruptcy, where the court requires you to pay a set monthly amount to your creditors over a 3-5 year period. Even before the drastic new law went into effect, 2 out of every 3 people failed at Chapter 13 bankruptcy. It will get much worse under the new law, because the court will set your monthly budget for you, based on what the IRS says it should be for your state and county. This is simply unrealistic, and once people realize how bad the new law is, they will run in the other direction from Chapter 13. (Forget about Chapter 7, where you wipe the debts away. The new law will make it very difficult to qualify for the old Chapter 7 fresh start.)

Again, the big problem with most debt relief programs is lack of flexibility. You cannot call your loan officer, the credit counseling agency, or the court trustee and say, “Hey, my kid broke his leg and I had to pay the hospital $500 to cover my insurance deductible, so I’ll need to skip my debt payment this month.” If you could, then these plans might have a chance of working. But such inflexible programs simply do not reflect the unpredictable nature of the average household budget.

So is there any debt program that does provide this flexibility? Yes. It’s called debt settlement, or debt negotiation. It’s certainly not for everyone. Debt settlement is an alternative to bankruptcy. It’s not for people who can pay their bills in full without hardship. But it can be a real blessing for those seeking relief from a crushing debt burden.

The reason debt settlement is so flexible is simply because YOU control the cash. You build up money in a separate savings account until you have enough to make a reasonable offer to one or more of your creditors. Like any debt program, debt settlement has its downside and its risks, but no other program provides this level of flexibility. Because the monthly payment is going into a negotiation fund that you set up and control, a bad month simply means you have less money to settle with. If you can make it up later, that’s great. If not, that’s life. When you have enough to settle ONE account (usually between 35% and 50% of the balance owed), then you make an offer. If your creditor takes the deal, then you start building up funds to knock out the next debt, and so on. It’s the only program out there that recognizes a basic reality: Your budget should set the pace for your debt elimination program. Not the other way around!

Again, debt settlement is not a magic bullet. It won’t cure every debt problem. But if you need to skip a month, or adjust up or down a little to reflect what’s going on in the real world, it doesn’t mean the end of the program. It’s truly a shame that the financial “experts” who have set up the bankruptcy rules, consolidation loan terms, credit counseling plans, and debt management programs haven’t figured this out yet. If they would just recognize this fundamental problem, then the success rate on their programs would increase dramatically and they could stop misleading the public about what works and what doesn’t in the world of debt relief