Low Life Insurance Rates Are A Smart Move For Your Wallet
As you plan your financial years ahead, are you thinking about life insurance? If you are financially in charge and understand the need for life insurance, you know about the important role that getting good life insurance premiums can play in your finances.
Many think that purchasing term life insurance is foolish as Murphys Law says that when you need it the most, it will have ended on you. Let us analyze this for a moment, and see the how we can think differently about it.
If you compare term life with variable life, you can purchase term for about five or ten cents on the dollar. And if you act far enough in advance, you will not even need term life insurance when the term ends.
Get smart about your financial situation for a moment and consider this scenario. Assuming you have children you are trying to bring up and a mortgage you are trying to pay off, there are some hoops you need to financially jump through. Roll up your sleeves; it is time to get to work.
Now, go get a low cost, twenty year term plan while you are trying to get the kids out and pay off the mortgage. This means that in twenty years these children will be long gone out of the house. The recession has taught us a couple of things about our personal finances. Start with paying off your debt and your home loan. The other is to save, and saving 15% of your income is a good place to begin.
If you play your cards right, save about 15% of your income, and pay down the mortgage, then at the expiration of your term policy, you will have 20 years of money put away. Your spouse and children will be covered because you planned ahead and have years of money put away.
Do you see how important finding competitive life insurance premiums are for planning for your future? Even if you are older, the kids are out of the house, but the home loan is not paid off get a shorter term life insurance policy that can protect you until it is.
If anything has come out of the downturn in the economy, it is that people like you are becoming more financially responsible. Make sure that you get the kind of life insurance premiums that compliments your financial growth.
Starting finding solid life insurance rates at www.infoprimes.com and let your financial savvy future decide what you want. Check them out. Great advice and good people.
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Why Paper? Part Three
TIP OF THE WEEK
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rNovember 20th, 2009
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rPart III – MORE ABOUT PAPER – DISCOUNT VS. LOANS
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rIn Part I, I gave you the definitions and perspective of paper I learned and developed over many years. In Part II, I gave you a real Paper case so you could get a handle on, present value concepts, discounting, Givens, and Ns and PMTs, which form annuities that make you money. Today, in Part III, let me show you through my experiences, why buying Paper at discount has always been far better for me than lending money.
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rBUYING EXISTING PAPER VERSUS MAKING LOANS:
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rHere is a list of the pros and cons of lending money versus buying existing Paper at a discount. When have finished the list, you will understand why I abandoned lending money and went back to buying Paper at discount.
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rFACTORS:LOANSDISCOUNTED PAPER
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rPayors need cash nowyesno – making payments Payors under pressureOftenNot borrowing money
rPayor loan constantsCan be highUsually much softer Payors Used to Making PaymentsNot yetYes
rPayors used to areaoften notHave a history in area
rTrack Record of PMTsNoYes
rEquity Build-upNoMost of the time
rProperty maintained wellNo historyOwner is/not taking care
rProperty AppreciationNo historyMost of the time
rLow Interest Rates on noteMarket interest rateYes (owner financing)
rHigh YieldsMarket Interest rateMuch higher
rCash Invested in the Paper105%40% – 70%
rAvailability of the PaperYesLess
rProfitableMostlyYes
rUsury LawsYesNo
rMy Experience to DateProblems (YES!)Fixable
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rWhen you make a loan to a new borrower, there is now a payor often with no history in the property, no payment record, no equity build up in the property, and no appreciation or renovations. The payor is not used to making payments, often the payor is new to the property and inexperienced with its problems, and I have no equity in my loan. My yield is close to the interest rate for with the payor has contracted. This is not an idea situation for me. I do not like lending.
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rIf I buy an existing note, the payor and the property and the seller of the note all bring their histories to the table for me to look at, study and evaluate. I get to see just how well the package is performing in all its many aspects. I can see that the property is worth more now than it was when the note was created. I can see that the payor cares about the property, cares about his finances, and cares to expand his property-management skills.
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rThe great benefit to buying discounted Paper rather than lending is that the yield (or return on my investment) can be many times greater than the interest rate any lender could ever charge legally. This is because I have less dollars invested in the than note than are owed to me on the note. Hence, I have built in leverage and more flexability with in the note. You need to understand the great difference between the terms interest and yield.
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rJust about everyone thinks that because the two terms, “interest” and “yield” have a % sign after each of the them, Interest and Yield must be the same thing. Nothing could be further form the truth. They are in no way related. My yield is based upon my adjusted cost basis in the note; not the interest rate that the Payor has committed to pay. So my yield can be many times more than the face interest rate on the note. “Interest” applies only to the “Payor. ” “Yield” only applies to the “Payee” – the recipient of the payments.
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rSo, for all of the above reasons, I gave up being a lender and returned to the world of discounted Paper only.
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rGood Luck and Good Hunting (especially if you are looking for a turkey. HAPPY BIRD DAY to each and every one of you.)
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rJay