From the monthly archives:

April 2009

An Attempt to Understand My EIUL

cemetaryWhen I published my financial network map I didn’t think that 1.) people would associate my blow money as being money for blow, and 2.) that people wouldn’t know what Equity Indexed Universal Life insurance was.  This is kind of a sore spot for me because I have been a believer in term life insurance due to the vast difference in the cost of the insurance. I signed on to this whole life insurance policy back when I was not really involved my my families finances, my wife was in control and being led by her mom who is in the financial planning business.  I was more than happy to allow others to influence my decisions and now I am trying to figure out what it was that I signed up for.

What it is

EIUL is a form of whole life insurance which includes an investment portion where your earnings are tied to a market index. I use the term tied very loosely. This is not a true index fund like you would find at Vanguard or Fidelity but just tied to the fluctuations in the market and in no way actually invests in any stock or equity investments.

The Guarantee

You cannot lose money with the policy, except the money you pay for the insurance, but you could possibly not make much either. The cost for the insurance is pretty steep, I still haven’t quite figured out how much of the $300.00 per month I pay goes towards the actual cost of the insurance.  You are charged a decreasing surrender fee for the first 7 years so there is a good chance you wouldn’t be able to get anything out of it if you were to give up on the idea, this is where I am.

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Budgeting 101 – Why Budgets Fail

pigeon_lose_fingerSo far we have talked about tracking your spending, and setting up your budget. In this last installment of my Budgeting 101 series I want to touch on some of the problems people encounter with budgeting. Your budget is a fluid thing and requires periodic updating, no less than once a month you should be sitting down with your spouse or significant other and realigning your budget with the upcoming months requirements. I even know of some people who set weekly budgets to allow for more fluidity in their spending throughout the month. Your spending is going to change from month to month, so should your budget.

Tracking your spending gives you a general idea of where your money went but won’t always predict where it will go in the future. You may not always have the same items in your budget, you may need to add a budget item for a gift for upcoming birthdays or medical procedures.  The key is to constantly be reassessing your needs and wants and adequately budgeting both. Include your savings and debt payments and as your priorities change alter your budgets accordingly.

If you don’t adequately account for your projected spending and realize emergencies happen, you are going to fail to maintain your budget.  Once you start to fail to meet your budget goals you will want to stop budgeting.   Don’t stop budgeting just budget better, learn from your mistakes and do what works for you, eventually you will become a master of your budget, and your finances.

There are so many reason budget can fail to work effectively. Usually they are related to the budget setters not being committed to the budget, just like a diet you have to commit to it, not just go through the motions.

Don’t just take my word for it though, here are several reasons why budgets fail, submitted by the twitter faithful, if you didnt’ get a chance to be included you may not be following me.

@JeremyVoh: Budgets fail like diets fail. People try to make a sudden drastic a change to their lifestyle. Old habits prevail.

@ManVsDebt: People make them too complex. The more simple your budget is the higher probability of you adapting the process as a habit!

@Matt_SF: Budgets fail b/c of frustration. Most people hate to lose, so if they fail once or twice, they simply give up.

@MyLifeROI: Unrealistic goals/expectations

@The_Weakonomist:unplanned expenses have to be the #1 reason.

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Comparison Shopping – A Real Life Example

termites-croppedYou always hear people tell you to make sure you shop around before you buy anything. Most people equate this experience to things like buying a car or a new TV. If you are anything like me then you probably don’t do it as much as you should.

Comparison shopping works just as well for services as it does for consumer goods. You could liken the experience to a a government request for proposal process. You line up several potential companies, ask them all to perform a specified service and see what shakes out. The advantage you have is that you can then pit the proposals against each other to further lower the costs. I recently found termites near my garden which caused me to want to get protection for my house, the garden is only a little ways away.

I called a total of four different pest control companies and asked each one to come out and provide me a termite inspection and a quote for a bait type termite prevention system. I have opted to leave out the business names for the sake of the guys giving the quotes, you will see why a little later on.

Bug Guy #1 (Regional Chain)

The first bug eradication company offers the Sentricon termite baiting system and because my home is newish he will be willing to give me a new home discount if things check out. Bug Guy #1 does the following: he performs a detailed walk down of every inch of interior and exterior walls on the first floor, inspects all door jams, and looks inside the garage. He measures off the linear feet around the house, draws a pretty graph of the house, and then gives me a lengthy run down of termites and how the operate and how bait systems work. His quote is for $399 to install the bait system and the first quarter of monitoring, each quarter after that is $62.50. In total that makes it $586.50 for the first year and $250 per year after that for maintaining the system. This all includes a damage replacement guarantee if termites ever get in and do damage to my home.

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5 Free Tips to Save Money on Groceries

April 27, 2009

One of the biggest budget busters in our house has to be the grocery budget. With one more child on the way our expenses are certain to increase, here are five free surefire ways to save money at the grocery store: Create a Menu Plan At the end of each week create a menu for […]

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Sunday’s Sites – Earth Day Edition

April 26, 2009

Every Sunday I try to highlight four or five articles I found particularly insightful, or funny. This week I though I would highlight some of the Green articles that were floating around this week as a result of Earth Day on April 22. I had an awesome article this week on Composting to make free […]

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