Divorce and Your Finances
Divorce ranks as one of the most stressful of life's events, affecting not only the emotions, but also the wallets, of those involved. Because it may involve change at almost every level of life (e.g., social relationships, family, and work), it usually requires a fundamental reexamination of life goals and expectations. Once divorce has moved from a "possibility" to a "reality," it is essential that you learn how to protect your legal rights. From a financial perspective, divorce involves three things: division of marital property; child support; and alimony. Understanding the divorce process will help position you to have the law work to your advantage on all three fronts.
This is not intended to be tax or legal advice, you should consult with your tax or legal advisor about your specific situation.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Good Debt and Bad Debt
To manage debt properly, it's important to begin distinguishing between "good debt" and "bad debt." From a purely financial perspective, good debt is borrowing in order to purchase an asset that is likely to appreciate in value, for example, a home or business. Good debt may become "better" debt when the government subsidizes the repayments, as it does with a home mortgage interest deduction.
Conversely, bad debt is borrowing in order to purchase an asset that is likely to depreciate in value, for example, an automobile or borrowing for nonasset consumption such as a vacation. Bad debt has been made "worse" now that the government no longer subsidizes repayments for certain kinds of debts; interest on personal loans and credit card debt is no longer tax deductible.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Six Steps to Financial Success*
Sometimes, even well-compensated executives, professionals, and business owners find it difficult to attain long-term personal financial success. Although they may be achieving a level of financial security others might envy, their primary focus may be on developing their businesses or careers to the exclusion of taking care of their personal finances. If you are among these high-earners, here are six simple steps you can take to help put your finances on solid ground: 1) pay yourself first; 2) reduce your consumer debt; 3) diversify your investments; 4) make the most of your tax-deferred saving opportunities; 5) bring your estate plan up-to-date; and 6) set long-term financial goals.
*Securities offered through Registered Representatives of MML Investor Services, Inc., member SIPC.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Your Financial Privacy
Most individuals are shocked when they find out exactly how much of their personal and financial information is floating around on various consumer lists. To help stop the spread of your personal information, consider the following: 1) Do not give any of your financial or personal information to unfamiliar telemarketers or solicitors; 2) Try to avoid giving income and work information on product registration and warranty cards; 3) Be secretive about passwords or personal identification numbers (PINs) on bank cards, telephone cards, cellular phones, etc; 4) Avoid giving out your home phone number; and 5) Do not use your Social Security number as your driver's license number (states that use Social Security numbers for driver's license numbers will usually give you a different number upon request).
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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How Much Credit Can You Afford?
What a great question! Individuals are swamped with consumer debt and, yet, credit card applications fill the mail sacks at the post office. Of the $1.557 trillion dollars of consumer debt, (excluding real estate) in 2000, almost $900 million was charged primarily for vacations and automobile loans. (Federal Reserve Statistical Release 6.19 2/7/2002) With this load of debt, people may often forget to ask how it affects their overall financial condition. But, there is a guideline. It's called "The Rule of 35" and it works like this: No more than 35 percent of your gross pay should be expended on long-term credit financing, including your mortgage. The balance, 65 percent of gross pay, should go toward taxes and all other living expenses.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Why Long Term Care Insurance?
Did you know that nursing home costs now average between $30,000 and $90,000 per year depending on your geographic location? (Commerce Clearing House, 1999) As a result of these high costs, an extended nursing home stay could quickly deplete your income and savings. Medicare typically begins to provide benefits at age 65, but only for some skilled care for a short time period--not for the ongoing long erm care assistance that many elderly people may need. Because Medicare is not intended to cover chronic long term care expenses, long-term care insurance (LTCI) has become a popular method for easing the potential financial burden.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Life Insurance to Suit Your Needs
Life insurance is an important part of many financial protection programs. As you consider the wide array of life insurance coverage available, you may wonder what type of insurance really fits your current needs, and what you should plan for in the future. There are two general categories of life insurance: cash value and term. Each type has its own particular characteristics that fit certain needs and situations. A general understanding of cash value and term insurance will allow you to decide which type of coverage is right for you.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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Why Life Insurance?
Life insurance is a cost-effective method of meeting economic needs. Instead of trying to amass a sizable emergency fund—a task that may be near impossible to achieve—life insurance can help create a fund your family can fall back on in the event you suffer an untimely death. Life insurance on your spouse can add a greater amount of flexibility. For an affordable premium, you are really contributing to a very large pool along with other policyowners. This financial pool is managed by a life insurance company to pay death claims. It is the pooling of these premiums that helps make the cost of life insurance affordable.
Copyright © 2002 Liberty Publishing, Inc. All rights reserved.
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