Do's and Don'ts of Finances......

[Eddie Piggard]

and i will concede that point to you as well...as INVESTMENT Vehicles, they will not achieve many of the goals that a moderate to aggresive investor would pursue.  It is also illegal/unethical to sell permanent policies as investment vehicles.  The "separate account/variable account" are there to grow so as to control life insurance costs later in the policy.  The fact that they MAY have the POTENTIAL to be sources of equity later in life is icing on the cake, and should be treated as such

i'd be happy to sit down with any of you fine gentleman.  we could sit down and do some planning for your and your families. PM me and i'd be happy to schedule appointments with you all.

no thanks, I think I can manage with the knowledge I have.  And to address your LTC issue, he can start buying it now, with the money he saves by not going with the expensive VUL/Whole Life. 

[HawgPyle]

I'll list what I have along with some definitions of their purposes.

Emergency Fund - Quickly accessible money that can be used if the unforeseen happens.  For me, this ends up being an emergency/vacation fund.  I keep several months worth of income in this account.  It currently resides in a high interest savings account.  I put in a set amount monthly.  Any excess over the account minimum that I like to keep is used for vacations or other things.

Medical/Dental/Vision Insurance - provided thru work.  I cover my entire family with my companies medical/dental insurance because it's cheaper than my wife's and it provides better coverage.  We use my wife's vision insurance.

Disability Insurance - provided thru work.  Often forgotten, but useful if you can't work for some reason.

401k/403b - Invest at least enough to reach your companies match.  Max it out if possible.

RothIRA/IRA - My wife and I both have Roth's.  Our income is below the limits set for Roth's.  I think for most people, Roth is a better option early on, and as your income increases, shift to an IRA.  I could see people going with an IRA tho for the tax advantages.

Life Insurance - Some provided by work and some term life.  I don't believe in using a high fee/low return insurance platform to invest with.

529 Plan - Don't go for the argument of "What if my kid gets a full ride?", go for the "What if my kid doesn't get a schollie?".  You can pick any states 529 plan, but I do recommend Arkansas' because it does offer some state tax advantages.

Mortgage - I don't pay extra principal.  My return on my other investments is higher than my mortgage interest.  For example, if you had two options, one investment of 6.5% (your mortgage interest rate) or one of 8% (your ROI for roth/401k,etc), you'd pick the 8%.  So as long as my interest rate is higher on my investments than my mortgage, extra money goes into investments.  If the market pulls back to a point that this situation flips, I'll start paying extra principal.

[cdhogfan]

I'll list what I have along with some definitions of their purposes.

Emergency Fund - Quickly accessible money that can be used if the unforeseen happens.  For me, this ends up being an emergency/vacation fund.  I keep several months worth of income in this account.  It currently resides in a high interest savings account.  I put in a set amount monthly.  Any excess over the account minimum that I like to keep is used for vacations or other things.

Medical/Dental/Vision Insurance - provided thru work.  I cover my entire family with my companies medical/dental insurance because it's cheaper than my wife's and it provides better coverage.  We use my wife's vision insurance.

Disability Insurance - provided thru work.  Often forgotten, but useful if you can't work for some reason.

401k/403b - Invest at least enough to reach your companies match.  Max it out if possible.

RothIRA/IRA - My wife and I both have Roth's.  Our income is below the limits set for Roth's.  I think for most people, Roth is a better option early on, and as your income increases, shift to an IRA.  I could see people going with an IRA tho for the tax advantages.

Life Insurance - Some provided by work and some term life.  I don't believe in using a high fee/low return insurance platform to invest with.

529 Plan - Don't go for the argument of "What if my kid gets a full ride?", go for the "What if my kid doesn't get a schollie?".  You can pick any states 529 plan, but I do recommend Arkansas' because it does offer some state tax advantages.

Mortgage - I don't pay extra principal.  My return on my other investments is higher than my mortgage interest.  For example, if you had two options, one investment of 6.5% (your mortgage interest rate) or one of 8% (your ROI for roth/401k,etc), you'd pick the 8%.  So as long as my interest rate is higher on my investments than my mortgage, extra money goes into investments.  If the market pulls back to a point that this situation flips, I'll start paying extra principal.

Good plan.  This is pretty much what I'm doing.

[Eddie Piggard]

I'll list what I have along with some definitions of their purposes.

Emergency Fund - Quickly accessible money that can be used if the unforeseen happens.  For me, this ends up being an emergency/vacation fund.  I keep several months worth of income in this account.  It currently resides in a high interest savings account.  I put in a set amount monthly.  Any excess over the account minimum that I like to keep is used for vacations or other things.

Medical/Dental/Vision Insurance - provided thru work.  I cover my entire family with my companies medical/dental insurance because it's cheaper than my wife's and it provides better coverage.  We use my wife's vision insurance.

Disability Insurance - provided thru work.  Often forgotten, but useful if you can't work for some reason.

401k/403b - Invest at least enough to reach your companies match.  Max it out if possible.

RothIRA/IRA - My wife and I both have Roth's.  Our income is below the limits set for Roth's.  I think for most people, Roth is a better option early on, and as your income increases, shift to an IRA.  I could see people going with an IRA tho for the tax advantages.

Life Insurance - Some provided by work and some term life.  I don't believe in using a high fee/low return insurance platform to invest with.

529 Plan - Don't go for the argument of "What if my kid gets a full ride?", go for the "What if my kid doesn't get a schollie?".  You can pick any states 529 plan, but I do recommend Arkansas' because it does offer some state tax advantages.

Mortgage - I don't pay extra principal.  My return on my other investments is higher than my mortgage interest.  For example, if you had two options, one investment of 6.5% (your mortgage interest rate) or one of 8% (your ROI for roth/401k,etc), you'd pick the 8%.  So as long as my interest rate is higher on my investments than my mortgage, extra money goes into investments.  If the market pulls back to a point that this situation flips, I'll start paying extra principal.

sounds like a Dave Ramsey plan....if not, pretty darn good on your own!!

[Seconds]

Stash a bit in a 401, Go to Cabo, Buy that new truck, Hit Vegas once a year. Or you can save for that Jetski at 65 yrs old. Your last meal could be breakfast Sat. My kids are not getting the cash I worked for, I love them but make yer own jack.

The house that Ruth built is still here and he never took it with him. Just like yours.

See the country and enjoy your life. Your dead one day and in 3 days after the fact no one cares. Execpt the ones who will live off of your money.

Money is not the driving force of life, Time is.

You would give back ALL the money you saved to see your family one more time . So see the family and spend that money with or on them today.

I unnerstanz, pawpaw. Can I haz some jack to getz grankidz some toys?

[Snort and Squeal]

I currently have a $75,000 whole life with Northwestern and then $400,000 in convertable term.  The same for the wife.  My thoughts were with some whole life and the convertable option then if we became uninsurable it really didn't matter because we could convert with simply a signature assuming we had some major health issue at the time our term was going to expire.  Just my thinking at the time and Northwestern averages 8% return on the whole life.

[HawgPyle]

I've always meant to read Dave's book, but I haven't yet.  I've gotten most of my info from various sources online, such as blogs, forums, etc.  Wouldn't surprise me if some of it came from Dave's books.  The Motley Fool website is pretty good too.  Lots of forums.

[hog.goblin]

I currently have a $75,000 whole life with Northwestern and then $400,000 in convertable term.  The same for the wife.  My thoughts were with some whole life and the convertable option then if we became uninsurable it really didn't matter because we could convert with simply a signature assuming we had some major health issue at the time our term was going to expire.  Just my thinking at the time and Northwestern averages 8% return on the whole life.

Don't let that 8% fool you.  That's a tax adjusted rate...meaning you are likely earning about 5% tax-free which equates to approximately 8% before taxes.  You'll find that in the small print.

However, if you are going to buy any kind of life insurance on your own (as opposed to through a group plan through work), Northwestern is one of the best.

[Eddie Piggard]

one of the keys with the term life is to get one that's convertable.  so at the end of the term if you became uninsurable you could convert to a permanent if you needed. to.

the biggest key to term is to be debt free once you get to the end.  you don't need it after that.  remember, most people carry life insurance to pay off those debts so loved ones don't have to worry.  if you invest wisely, over a 20yr term, you should have the same amt or hopefully more, plus be debt free.  then the loved ones have all of the money to themselves and you were covered for the unthinkable in the process.

[Masshog]

Do: research investment options and find something that is comfortable to you and the level of risk you want to take.

Do: buy when the market is selling and sell when the market is buying.  Don't buy all at once either, acquire your position at planned increments and sell (take profit) at planned increments.  For example buy BAC at 31 and keep buying until it reaches 34, sell it above 40 and make 7.7% on the dividends in the mean time.

Do: dump the VUL - you got ripped

Do: have term policy for you and your wife and invest the rest, by the time you retire your investments will be worth more than you insurance coverage and you won't need the insurance any longer.

Don't: take advice from a bunch of people you can't see on a sports messag board

Someone bashed Jim Cramer earlier, now I don't follow what he says but watching him did give me the courage to make my own decisions and beat the returns I was getting on my mutual funds.

Im glad he gave you courage, because his investment advise she gives is for crap.

[Masshog]

To make one of my prior points as to the value of Wall Street/Brokerage advise:

    "Investors who followed the advice of analysts who say when to buy and sell shares of brokerage firms and banks lost 17 percent in the past year, twice the decline of the Standard & Poor's 500 Index.

    Buying shares on the advice of Merrill Lynch & Co.'s Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, cost investors 17 percent, according to data compiled by Bloomberg. Deutsche Bank AG analyst Michael Mayo's counsel to purchase New York-based Lehman Brothers Holdings Inc. lost 59 percent. Citigroup Inc.'s Prashant Bhatia still rates Merrill ``buy'' after its 56 percent retreat from a January 2007 record.

    Of the 38 analysts tracked by Bloomberg who follow stocks in the Amex Securities Broker/Dealer Index, 31 produced losses for investors. Investors who bought brokerages on "buy'' recommendations, sold when they switched to ``hold'' and speculated prices would decline when analysts said "sell,'' lost 17 percent in the last year through June 3, compared with the S&P 500's 8.5 percent drop.

[HogNuttz]

This is the thread I was hoping for...

thanks for all the post guys and I will check into a term option for sure.

Keep 'em coming.

J.A.Y.

I agree with the other's.  Variable life insurance is crap, well not totally but a large portion of it.  Do some research on Charles J. Givens, if you don't know who he is, and then see what his opinion on life insurance is.  He has a book called Financial Self Defense that I strongly recommend to anyone.  It is a great book that has a lot of pratical ways for the average Joe to save some hard earned $$$.

[J.A.Y.]

****UPDATE****

Here is the situation I am in.

The VUL's that we have on myself and my wife were purchased through our former advisor( my NOW former uncle b/c of divorce from my aunt).

I have researched everything and spoken with a few different financial advisors about our situation.

As of today  we are getting a Term policy for myself, and stopping the funding of the VUL.

I have enough to cover a few months of policy on the VUL so they will overlap for a while(mainly the application process of the Term).

Once the wife delivers us a beautiful healthy baby around October, we are going to do the same for hers.

With the money we are saving we are opening another Roth, this one in her name.

We are also adjusting the amounts we are putting into our 401k to mirror our company matches, and putting the difference in her Roth. That will give us (2) maxed out Roths

Thanks for all the post guys, I hope someone learns something from this thread/forum.

It has already been helpful to me.

[cdhogfan]

****UPDATE****

Here is the situation I am in.

The VUL's that we have on myself and my wife were purchased through our former advisor( my NOW former uncle b/c of divorce from my aunt).

I have researched everything and spoken with a few different financial advisors about our situation.

As of today  we are getting a Term policy for myself, and stopping the funding of the VUL.

I have enough to cover a few months of policy on the VUL so they will overlap for a while(mainly the application process of the Term).

Once the wife delivers us a beautiful healthy baby around October, we are going to do the same for hers.

With the money we are saving we are opening another Roth, this one in her name.

We are also adjusting the amounts we are putting into our 401k to mirror our company matches, and putting the difference in her Roth. That will give us (2) maxed out Roths

Thanks for all the post guys, I hope someone learns something from this thread/forum.

It has already been helpful to me.

Sounds like you will be able to retire early.  Keep up the good work.

[J.A.Y.]

I actually got a few quotes from one of the sites that is linked in this thread.

My advisor is looking into Genworth, but I told him he needs to match the $$ I have been quoted.

[J.A.Y.]

Thats the only thing I dread about all of this, I HATE GIVING BLOOD.

[J.A.Y.]

acutually 30 yr.

I am only 27.

[Eddie Piggard]

Awesome, J.A.Y.  I wish I had done a 30, but I am satisfied with my 20....13 left on it.  You will not be disappointed.  When you start getting close to the age of fifty, jump on the LTC insurance.  then, you should be set.

[PorkRyan]

To make one of my prior points as to the value of Wall Street/Brokerage advise:

    "Investors who followed the advice of analysts who say when to buy and sell shares of brokerage firms and banks lost 17 percent in the past year, twice the decline of the Standard & Poor's 500 Index.

    Buying shares on the advice of Merrill Lynch & Co.'s Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, cost investors 17 percent, according to data compiled by Bloomberg. Deutsche Bank AG analyst Michael Mayo's counsel to purchase New York-based Lehman Brothers Holdings Inc. lost 59 percent. Citigroup Inc.'s Prashant Bhatia still rates Merrill ``buy'' after its 56 percent retreat from a January 2007 record.

    Of the 38 analysts tracked by Bloomberg who follow stocks in the Amex Securities Broker/Dealer Index, 31 produced losses for investors. Investors who bought brokerages on "buy'' recommendations, sold when they switched to ``hold'' and speculated prices would decline when analysts said "sell,'' lost 17 percent in the last year through June 3, compared with the S&P 500's 8.5 percent drop.

Whoever wrote that article is a moron.  You can't compare the performance of a broker/dealer analyst to that of the S&P 500, you compare his performance to that of the broker/dealer index.  Guy Moszkowski lost 17%, the index is down 37%.  Guy is the top broker/dealer analyst in the world and him beating his benchmark by 20% shows it.

I find it funny how the author selected the worst performing index to make his point.  Why not see how the oil analysts at the big firms did against the S&P 500.  How do you think that would look?

[Masshog]

I don't think they would look very good at all, but in this case you do have a great point. 

[Masshog]

And specifically in the case of oil analysts, they probably look ok... the last two years.  I have seen (and used) street research for too long to believe that there is any great advantage in it. 

[ConwayHog]

i also got waiver of premium rider which added about $10.00 to the 18 dollar.  which i probably didn't need, but if she gets disabled I won't have to worry about paying the premium.

You're paying 10 dollars a month to avoid paying 18

[ConwayHog]

i know, but if you read my post right after that i woke up and realized that was totally stupid, so i'm having them change it.

How long did it take you to figure that out, i.e. how long has it been since you signed your name on the dotted line and now?

Just curious why you didn't look at like that when you signed up for the policy?

I guess different folks have different buying behaviors.

[cdhogfan]

How long did it take you to figure that out, i.e. how long has it been since you signed your name on the dotted line and now?

Just curious why you didn't look at like that when you signed up for the policy?

I guess different folks have different buying behaviors.

I guess not everyone has the millionaire mind like you.

[Eddie Piggard]

How long did it take you to figure that out, i.e. how long has it been since you signed your name on the dotted line and now?

Just curious why you didn't look at like that when you signed up for the policy?

I guess different folks have different buying behaviors.

look, we have all done "stupid", lets cut him some slack.

[kingofdequeen]

"Pel Legs" knows his stuff.

At least his dad does...

Tell "papa" one of his old understudies said "howdy".