Personal Finance Blog
Motorcycle insurance isnâ€™t usually terrifically expensive to begin with on most bikes, so many riders donâ€™t give it much thought until they really need it. Thereâ€™s nothing wrong with saving on insurance for your motorcycle, though. In fact, you might just be surprised by how much you can save just by taking a few easy steps!
Improving your skills – Insurance companies love when their policyholders know what theyâ€™re doing. It means that there is significantly lower chance that theyâ€™ll have to pay a claim any time soon. Thatâ€™s why practically every insurance company that carries motorcycle coverage offers a discount for riders who successfully complete an MSF-approved safety course. Fortunately, there are two ways in which this can save you some money – first off, it will reduce how much you pay in premiums, and secondly, since youâ€™ll be a better rider, youâ€™ll pay less in repairs and hospital bills, as well! These rider education courses are usually offered by local motorcycle dealerships, but some may be provided by your local sheriffâ€™s department. Either way, you get the same level of training as well as that valuable certificate to send to your insurance agent!
Double-Check your discounts! – Depending on how old you are, your insurance company may be overcharging you based on their own discount criteria. You have to be aware of what discounts youâ€™re entitled to, because regardless of what the companyâ€™s commercials say, theyâ€™re not going to hurry themselves much when it comes to charging you less money. If your family circumstances change, like you get married, or even cross certain age barriers, you owe it to yourself to check out your discounts, and then let your insurance agent know whatâ€™s what!
Reexamine your coverage – Whether itâ€™s a car, truck, or a motorcycle, itâ€™s going to depreciate in value, meaning that at any given time, you could be spending more on your collision and comprehensive insurance coverage than your bike might actually be worth. For instance, letâ€™s say your bike is worth $2500 in its present condition and with its present mileage. You might have paid $10,000 for it new, and the bank no doubt wanted full coverage insurance in order to extend you a line of credit, so your comprehensive and collision coverage were set at the new sale price. The insurance isnâ€™t going to buy you a brand-new $10,000 bike though. Theyâ€™re going to give you fair value for the bike, which, if youâ€™re lucky, might be around $2600 (if you get a really good appraiser) Thatâ€™s regardless of whether youâ€™ve been carrying the $10k coverage all this time or not. Instead, try to match your coverage with the value of your bike. As itâ€™s price depreciates, youâ€™ll pay less for insurance, as well.
Switch Companies – Every so often, change is good. The same holds true with insurance, regardless of how good a deal you got when you signed up. Many insurance companies occasionally change their rate policies, so where one offers a discount, another might not. Essentially, what this means is that it pays to get a competing quote now and then. The only thing you have to be careful of is that youâ€™re comparing apples to apples, rather than asparagus to a radial tire. Make sure that the quote you receive is for the same coverage, with the same deductible, rather than a lower amount of either of these two things. Some insurance companies may try to lure you into lesser quality coverage or inadequate coverage under the auspices of saving a few bucks, when it might be that your current insurance carrier has the same coverage for less money than the competitor has!
If youâ€™re new to the investing game, or you simply consider yourself a novice, (In that you donâ€™t spend three or more hours per day tracking the markets and making trades,) then youâ€™ve probably looked once or twice at an IPO and wondered, why not? If the big boys can do it, why canâ€™t I?
IPOs, or Initial Public Offerings are stock securities in companies that anyone can purchase, and that can really make or break a portfolio, depending on what stock is purchased, for how much, and just how much of a hollow stock it really was. One example that has served to scare a lot of people away from the IPO market (and rightly so) is the recent Facebook stock offering. Expectations from wall street to the man on the street had this stock as the one sure-thing, get rich quick stock pick of all time. After all, who doesnâ€™t use Facebook? Pretty much no one, right? It was to be a cultural phenomenon as much as a new stock offering, and many millions of people ponied up to the table when the NASDAQ bell rang on May 18, 2012. Unfortunately, a series of problems hampered the early trading, marred the IPO, and it has yet to recover.
That doesnâ€™t mean that those first day stock offerings are always bad, though. Google and LinkedIn are two stocks that soared after their offering. LinkedIn, for example, was initially offered at just $45 per share, and within a day, had more than doubled to close at $94.25, a tidy sum for anyone who had been a part of that first offering. The most recent close was, as of May 1, 2013, $194.82, more than four times the price of the IPO!
That would have been a great deal, right? Especially if youâ€™d bought then, dumped your retirement into it, and sold now! NO. Let me reiterate. NO!NO!NO! (Picture also getting whacked over the head with a whiffle ball bat.) Get such thoughts out of your mind, because avarice like that has no place in the logical brain of a smart investor! The reasons for this span a wide spectrum, but are primarily because emotions can run high during such an offering, inflating the price of the stock far beyond any reasonable level until the stock is so overpriced, that the market cannot bear its weight. Often times, this is due to public sentiment toward the stock (take Facebook, for example) that gets people thinking that just because they use said companyâ€™s product or products regularly, if not religiously, then everyone must, and therefore, the stock will be worth a fortune!
As is always the case, though, popularity does not a profitable company make. A corporation could be the hottest ticket going at the moment, and find itself in trouble with its stock price because it didnâ€™t meet investor expectations, or missed an earnings goal for a quarter. Practically anything can lay waste to a stockâ€™s price, and IEPs are particularly susceptible to these motions. The â€śdot-com bubbleâ€ť is one graphic representation of just how dangerous it can be to assume too much about the stock market.
So, should you steer entirely clear of initial public offerings? No, that wouldnâ€™t be smart either. Donâ€™t get too excited about them, though. Perform your due diligence on the company before the offering, and if you like the look of it, invest an amount that youâ€™re comfortable with parting with. Keep in mind that you may be parting with that cash for a good, long time, so be prepared for what could be a long haul. On the other hand, thereâ€™s plenty of reason to think that betting a few dollars on the new horse could pay off handsomely!
Sometimes, life just throws you a curveball. Even when you think youâ€™ve got things handled, thereâ€™s always the chance that the good luck youâ€™ve had will implode and leave you in the lurch. While its never a great idea to take a loan from your 401-k, you do have the weigh the benefits against the drawbacks before you make a decision either way. Itâ€™s safe to say that if youâ€™re even considering such a move, your finances are in a pretty rough patch, and although many professional advisors and bankers will tell you never, under any circumstances, to touch your 401-k, there are situations when doing so could actually save you money, and obviously, emergencies do happen.
There are only a few instances in which the IRS wonâ€™t penalize you for taking an early withdrawal. That doesnâ€™t mean you wonâ€™t have to pay the taxes on that money, though – just the penalty. After all, since 401-k contributions are tax deductible, you do have to pay the taxes on that income eventually. The question is whether you pay now or later. These instances that allow you to avoid the penalty do not include such situations as your needing to pay off some credit card debt. Similarly, you canâ€™t go out and buy a car with the proceeds. If youâ€™re thinking of doing something like that, then shame on you. A car isnâ€™t an emergency!
Generally, the exceptions that allow you to take an early deduction sans a penalty include distributions for the purchase of a house, medical expenses greater than a set percentage of your adjusted gross income (Check with the IRS on this one for current rates,) permanent disability, paying health insurance premiums if youâ€™re unemployed, paying college expenses, or the payment of tax debts to the IRS. Otherwise you can expect to pay at least 10% of the taxable amount of your withdrawn 401-k, in addition to the percent tax that you fall into based on your income. Another thing youâ€™ll have to watch out for is if the use of your 401-k will kick you into a higher tax bracket for your yearly taxes.
So, now that youâ€™ve got the basics out of the way, itâ€™s time to get down to the nitty-gritty of the question. Is it a good idea to cash out some or all of your 401-k in order to pay off some debt? Nine out of ten times, the answer to that question is going to be a no, and hereâ€™s why. Itâ€™s easy to take the early distribution, but not so easy to pay it back again, which is what youâ€™d have to do in order to avoid paying too much in taxes. Think about it for a moment. Even if youâ€™re paying off credit cards, once theyâ€™re paid off, do you have the sense of responsibility enough to keep paying the same amount back to your 401-k that you were paying to your credit card? If you hesitate to say yes for even a second, then you really do need to think about what youâ€™re doing. You might not be able to pay enough back, and then youâ€™ll be stuck essentially starting from scratch to build your retirement back up again!
The problem with taking a loan from your 401-k is that the proceeds of that account are cumulative. Taking out just one yearâ€™s worth of savings can lead to a loss of tens of thousands of dollars from your retirement when you do decide to call it quits. The reality of the situation is that it could mean the difference between a working retirement and a relaxed, comfortable one.