To be on the safe side, it’s best to review your home insurance policy on a regular basis. Renewal time provides the perfect opportunity because you’ll have your policy in hand and it will be
easy to make changes before you write a check. With a quick review, you may discover ways to improve your coverage and maybe even save a little money in the process.

Step One: Has Anything Changed?

When your renewal notice comes, the first thing you should do is read over the policy. Make sure all the basic information is correct– name, address, phone number, and property description.
If you have a garage, shed, or other outer building, there should be a notation on the policy. Also ensure the information concerning the mortgage holder is complete, accurate, and up to date.

Special tip: If you had a second mortgage that’s paid off, make sure the mortgage holder isn’t listed on the policy. In the event of a substantial claim, all parties who have a vested interest in
the home are included on the check. If the second mortgage holder is listed, but no longer has an interest in the property, it’ll be a nuisance to straighten the matter out. It’s far better to have them
removed before it becomes an issue.

Step Two: Do You Have Enough Coverage?

One of the most important things to look at when reviewing your home insurance policy is the amount of coverage you are carrying. A common mistake people make is to underinsure
their home. Although it may be tempting to save a little money in premiums by not carrying all the insurance you really need, you could end up having significant out-of-pocket expense if
something does happen.

Special tip: Most policies have an automatic cost-of-living adjustment. Due to inflation that amount generally goes up. In your review, determine if this adjustment exists and if it will cover
you in case of emergency. If the adjustment is a minimal amount, you may be able to save a little money by foregoing the increase. Be sure you keep an eye on it though, in case of larger
increases in the future.

Step Three: Have You Upgraded Your Home?

If you’ve made significant improvements to your home or property, it is likely more valuable than it was before. Your coverage should reflect this increase. If you need to file a claim or
rebuild the property and your improvements haven’t been included in your policy, you could end up taking a loss.

Special tip: It is your responsibility to inform your agent if you’ve added a security system, a new room, or redone existing parts of the home, such as a complete remodel of the kitchen. These
things can add considerable value to the home and may cost a lot more to replace. A security system could also net you a discount if your agent is aware of its existence.

Step Four: Are Discounts Available?

Find out about any discounts you’re entitled to. It may be to your advantage to combine your home insurance policy with auto and life insurance policies. Multi-policies usually lead to
considerable savings.

Special tip: If you have any questions concerning discounts–what’s available and how much the savings might be, contact your agent. They have the answers and will be more than happy to help
you determine what choices to make. After all, a satisfied customer is a happy customer, and a happy customer means repeat business.

Step Five: It’s Time to Make Improvements

After reviewing your policy, sit down with your spouse and discuss ways you can make improvements to your policy. Determine if there are any holes in your coverage that need to be
addressed. Your agent should call periodically to go over your policy with you, and point out any areas where prices or coverage have changed. Review your policy with them at that time. If
your agent doesn’t contact you on a regular basis you may want to consider shopping around for an agent that will take a more personal interest in you and your property. The bottom line is that
you want to make sure you’re protected in case of emergency, and if something does happen you want to be able to concentrate on making the necessary repairs and not on collecting the cash to
do so.

Special tip: Any time you can raise your deductible your premiums will drop correspondingly. If you take this route, make sure doing so won’t cause you to lose any sleep. Raise it only as much
as you feel comfortable with.

Guest post from Bailey Harris, who writes about homeowners insurance forwww.homeownersinsurance.org.

The Federal Citizen Action Center offers the following tips for finding a good savings account.  When choosing the one that is right for you, consider:

• Minimum deposit requirements. Some accounts can only be set up with a minimum dollar amount. If your account goes below the minimum the bank may not pay you interest on the money you deposited and you may be charged extra fees.
• Limits on withdrawals. Can you take money out whenever you want? Are there any penalties for doing so?
• Interest. How much (if anything) is paid and when: Daily, monthly, quarterly, yearly? Is this a variable rate or fixed rate savings account? To compare rates offered locally to those from financial institutions around the nation, visit www.bankrate.com
• Deposit insurance. Make sure your bank is a member of the Federal Deposit Insurance Corporation. This organization protects the money in your checking and savings accounts, certificates of deposit and IRA accounts up to $250,000.
• Credit unions. A credit union is a nonprofit, cooperative finacial institution owned and run by its members. Like the FDIC does for banks, the National Credit Union Share Insurance Fund (NCUIF) insures a person’s savings up to $250,000.
• Convenience. How easy is it to put money in and take it out? Are there tellers or ATM machines close to where you work and live? Or would you receive most of your service via the telephone or Internet?

Also, don’t forget to check out your local credit unions. They often offer the best rates around, and have great customer service to boot.  Remember to look into high interest checking accounts as well. These tend to have many strings attached, such as requiring you to use direct deposit, a minimum number of debit card purchases per month, and a cap on the amount of money that can earn interest. However, if you’re doing all those things already, you may find that your best fixed rate savings account is actually a checking account. Happy saving!

In some cases, refinancing almost always makes sense. Let’s say you have an adjustable-rate mortgage (ARM). ARM’s are extremely risky, as your rate and monthly payment can increase greatly when the loan adjusts. In a split second, your manageable $1500 monthly payment can turn into a crippling $3000 payment. If you have an ARM, you should refinance to a fixed rate as soon as possible, period.

If you already have a traditional, fixed-rate mortgage, you’ll need to do some calculating to determine whether it’s worthwhile to refinance. Here is some key information you’ll need to know: 1) how long you expect to own your house, 2) what rate you can expect on your new loan, and 3) how much you expect to pay in fees. A lender can help you estimate the last two.

Once you have estimated these, you are ready to calculate your break-even point. This is time it will take for your monthly savings to exceed to amount you will pay in fees to refinance. Here’s how:

1. Use a mortgage calculator to estimate your new monthly payment.
2. Subtract the new payment from your current payment to see how much you’ll save per month. For example, if your current payment is $1500 and your estimated new one is $1350, your monthly savings is $150.
3. Divide your estimated refinancing fees by your monthly savings. In our example, if the refinancing fees are $2745, we divide by our monthly savings of $150 for a breakeven point of 18.3 months. This means it will take us about 18 months to break even on this refinance.

If we plan to keep the house much longer than 18 months, it makes sense for us to refinance. Otherwise, we stay with the current loan.

Other factors like taxes can complicate things a but, but calculating your breakeven point is a good rule of thumb for deciding if a refinance is a good move for you. If so, then don’t wait to lock in your rates. They have nowhere to go but up.

The truth is, mortgage life policies are nothing more than life insurance that costs four times too much.  Just get a plain vanilla term life insurance for the right amount (10x your salary) and your beneficiary can pay off the mortgage when you die. If you are stuck with a mortgage life policy now, make sure you have a good term life policy and then cancel the mortgage life.

Readers, what do you think? Did you get stuck with one of these policies and regret it? Or do you think they’re worthwhile? Share your thoughts!

To quickly recap Part 1, my family was $25,000 in debt with no savings, and seriously stressed out. Chet and I had enrolled in Financial Peace University, and were excited about the prospect of becoming debt free. 

Our first class got us even more motivated. We met others who were in similar circumstances . . . some a little better, some a little worse. Our instructors had recently completed the class themselves. They explained that the concepts had greatly improved their lives and hoped the same would happen for us.  Then we watched the first video. Dave Ramsey gave an overview of the program, and we learned that our class would consist of seven Baby Steps. Step One was to get $1000 in the bank for a starter emergency fund.

Dave told us we needed to  put $1000 aside within one month. At the time, I thought he was crazy. We could barely pay all our bills, so how could we come up with another thousand bucks within a month? Then Dave told us how to do it. Sell a bunch of old stuff. Work extra hours or take a second job. Cut expenses. Or preferably all of the above.

So we did just that. We had some college textbooks lying around that we sold on Half.com. I took a second job teaching for the University of Phoenix. Chet taught summer school. We got on a written budget and cut back on expenses like eating out. I started clipping coupons and stockpiling groceries when they went on sale.

Within a month, we had scraped up $1000. We were proud to report to our classmates that we had completed Baby Step One. Now we could get serious about attacking the debt. Or so we thought.

Not knowing the whole story behind your question, I will tread very carefully here. . .like I used to do in marching band when we had to march behind the horses.

You mention having a good-sized emergency fund, but not whether you have any consumer debt such as credit cards or car payments. If you do, you should absolutely not make any nonessential major purchases until you pay them off. Otherwise, keep reading.

My rules for making any major (over $500) nonessential purchase are as follows:

1. You must be out of consumer debt and have an emergency fund of 3-6 months expenses.
2. You must pay cash for it (no financing your friend Flicka).
3. You and your spouse must agree on the purchase, or at least work out a tradeoff where each spouse gets to spend the same amount of money on a major nonessential item. You get a horse, I get a 48-inch LCD TV.

So that’s my financial take on things. I assume you’ve already addressed the logistical concerns like where the horse will live, who will feed the horse and clean out its stall, and whether you have time to ride/exercise it.

If you’ve read all this and still have a hankering for a horse, then giddy-up and ride-em cowboy.

So here’s how to sell the upside-down car:

1) Read the fine print on the balance transfers to make sure you understand the interest rate and any applicable transfer fees. In most cases, paying a modest fee will be worthwhile to get rid of a monster car payment.

2) Use one Balance Transfer check or a combination of checks to pay off the car loan. Depending on which state you live in, you may have to wait a few weeks to get back the free-and-clear title to your car.

3) Sell the car. Do some research at http://www.kbb.com/ to set an appropriate price. You’ll usually get a better price placing a classified ad and selling to an individual rather than selling to a dealer.

4) Use some of the proceeds to buy a VERY CHEAP CAR. Again, buying from an individual is generally cheaper than buying from a dealer. In my opinion, the best buys are older, out-of-style cars with low mileage. Yes, they do exist if you’re willing to hunt for them–and swallow your pride. Of course, you’ll want to get an independent mechanic to check out the car first to make sure you’re not buying a lemon.

5) Use the rest of the proceeds to pay down the Credit Card balance. You’ll have some balance remaining, but that’s OK; you’re still less in debt than you were before.

6) Put the remaining debt in your overall payoff plan. Depending on the amount and the terms (is the rate for life, or does it expire) you may want to attack it first or wait until later.

Good luck!

Our President says the rest of the TARP money is necessary to prevent a total meltdown of the financial system. Maybe. But then again, maybe a financial system that messed up SHOULD be allowed to melt down so we can start over and build something better. What if the big arrogant banks did fail? Why couldn’t thousands of smaller, more responsible banks take up the slack?

Here’s a new idea. Forget about bailing out Chase and Bank of America. Let em’ stew in their toxic assets and fail if necessary. Instead, give bailout money to banks that behaved responsibly so THEY can lend it out, or buy up what’s left of the “toxic assets.” That would serve the purpose of getting credit flowing again at a much lower cost.

I’m not an economist, just an outraged taxpayer. But I am beginning to think I could run a bank AND a government better than the clowns in charge now.