5 Ways to Protect Your Family's Financial Independence

If you have a growing family, you probably realize that it has a way of outgrowing everything, especially their income and that there is a need for financial management.

While you are working towards achieving financial independence, think also about simultaneously implementing steps for protecting it. 

Having the right types of financial insurance and proper estate planning helps to relieve you of concerns associated with protecting your family's financial independence should a negative, unexpected event happens.

Consider these 5 financial management strategies for doing so:

1. Purchase long-term care insurance (LTCi) 

Long-term care Insurance is available to cover you if you acquire a chronic disease or disability and relieves your family of the burden of providing for your personal care. As I said in an previous post on long term care insurance, this type of policy covers the possibility of you not being able to perform at least two activities of daily living, without assistance, with the expectations that it will last at least 90 days. 

It includes a wide range of healthcare and social services such as day care, custodial care, home health care, hospice care, intermediate care, respite care, and skilled nursing care. LTCi does not cover hospital care.

2. Maintain appropriate levels of life, auto, home, and health insurance benefits.

Life insurance is one of the most important products you must consider obtaining in order to provide financial security for your loved ones. Auto accidents can cause financial and economic havoc to you and your family. Besides, in most states it's legally required. 

3. Homeowners insurance is especially a necessity for both homeowners and renters if you want to ensure that your possession are protected in case of a fire, theft, liability, or any other disaster. And, if you have ever been sick or injured, you know that it is important to have the right type of health insurance

4. Evaluate the need for an umbrella policy to help protect you from lawsuits. A serious personal liability lawsuit can reach catastrophic levels for the party defending the law suit as the judgment may potentially exceed the insurance policy liability limits. 

Once the liability limits are exhausted, the insured is often forced to pay a substantial amount out-of-pocket. Depending on your occupation and situation, you may require increased protection against catastrophic lawsuits.

5. Make sure your estate planning is up to date. The field of estate planning is a very complicated. It requires a focus on wills, taxes, law, and life insurance. 

Achieving and protecting your financial independence goes together. While it would be a shame for you to lose a substantial amount of of your money by gambling or taking a chance on risky stocks, it is equally a shame to have to pay out a substantial amount of money on a major hospital bill, for care in a nursing home, or through losing a court suit. After all you worked for it, why not keep it and pass it on.

I'll be delving into estate planning in a future post. 


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Medicare Annual Election Period is Over, But not for Everybody

If you meet certain requirements you can still 
make some changes in your healthcare coverage 
even after the Annual Enrollment Period (AEP) 
ended December 7th.

Here are 6 requirements for your eligibility:

1.     If you are duo eligible, that is, if you are eligible for both Medicare and Medicaid, you can make changes in your healthcare plan throughout the year.

2.     If you have a special need, specifically diabetes, you can also make changes throughout the year. 

3.     If you just you just turned 65 and became eligible for Medicare, you have a seven month (three months before your birthday, your birthday month, and three months after the birthday month) window to enroll in whatever Medicare Advantage plan or Part D Prescription plan you choose. 

4.     If you become eligible due to a disability.     

5.     If you move, you may change to a different plan than was offered in an area where you formerly lived.      

6.     And, if your coverage through your employer or union group health plan ends, you have a Special Election Period (SEP) to enroll in a Medicare Advantage Plan or a Part D Prescription plan. The SEP ends two months after your coverage through the group plan ends.

Still have questions about your health care plan? Still thinking about changing, call me at (773) 614-3201.

5 Rules to Follow if You Want Good Credit

There are the financial gurus or advisers on TV, radio, and in print that advise their followers to cut up all their credit cards and go on a cash only basis. 

These advisers often already have a great cash flow either from their book sales, their speaking engagements, their media gigs, their investments, or any combination of the above. Ironically, often they used credit to get to the point where they are and now they are advising all of us to stop using credit.

However, for most of us, carrying a few credit cards is the norm. Nevertheless, if you want to keep your already good credit or want to improve your credit even more, there are some things you should not do: 

1. Don't miss a payment and end up paying 30 days late. This results in an immediate negative impact on your credit score.

2. Don't resume paying a delinquent account if it is over two years old unless you are applying for a mortgage loan and the lender requires it to be paid off. Delinquent account over two years old have minimum impact on your credit score and if you start paying it again, the algorithms at the credit bureaus will treat it as if it was a recent entry. Please avoid doing this. Do not feel guilty that you didn't pay this obligation, it has been charged of as a bad debt by the creditor.

3. Don't accumulate more than five revolving credit cards (for example, Master Cards, VISA cards, and Discover cards) and always ignore the instant credit offers from retail stores giving you 10% off. They almost always have a higher interest rate and besides these stores accept Master and VISA cards anyway. They just want to make extra money off of you.

4. Don't allow your credit to exceed 30% of your credit limit. For example, you have a credit limit of $1000 your balance should not be more than $300. The larger the spread between your balance and your credit limit the better. If you can afford to pay off your balance each month prior to the due date on your statement, that would be even better.

5. And finally, don't close your credit cards that have these low balances and transfer these balances to new credit cards offering lower interest rates. That will result in you having fewer credit cards with higher balances thus impacting your credit score negatively. Instead, negotiate with your current creditors for a lower interest rate. You already have a good record with them and chances are they will not want to lose your business. 

Make these don'ts a habit and you will continue to maintain your good credit, and even see it improve.

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