Do Your Finances Need A Tune-Up?

Source: 123rf.com
Image ID : 111332213
Copyright : Tom Baker

 

This year has certainly been full of surprises, partially from the fear surrounding COVID-19, and partially from the economic upturns which have wracked the entire globe. From long furloughs to unemployment, people everywhere are feeling the financial effects.  We are officially in a recession, which makes it even more important for everyone to review their finances and find ways to protect themselves during the financial downturn.

There are general financial guidelines which should always be followed, such as paying down debt, establishing an emergency fund, finding other means to generate income, and continuing to contribute to retirement accounts.  Another vital component in good financial health is establishing a budget and really examining your spending habits.  Almost invariably, people find out after they create a budget that they are spending money needlessly on frills that they don’t need.  By eliminating those hidden money drains, it becomes easier to cover living expenses, thus reducing some of the stress involved in getting by financially.

I have had a budget in place for over 30 years, and I have seen the power it wields.  By following a budget, I was able to pay down all credit card debt, pay off a car, establish an emergency fund, and put money aside for retirement, so I know it can all be done.  Even at this point, with zero debt, I am acutely aware of my budget, and I review it on an almost weekly basis to make sure I am on track.

Source: pigly.com

 

If you need help in establishing a budget, you can use a budget calculator. I found a wonderful budget calculator on Pigly.com which is very easy to use, and extremely thorough.  It helps you break down all expenses, from the essentials to debts and savings so you can target all your goals and ensure that your income is allocated optimally. All you have to do is plug in your income, and the calculator will automatically generate a low end and high end for all the categories.  So even if you have never established a budget before, you can set one up instantly.

When budgeting, don’t be afraid to contribute to your retirement accounts right now, as long as you have your debts paid down and you have an emergency fund in place.  I am a big proponent of Dave Ramsey’s investing philosophy, and I am grateful that I educated myself on financial wellness and dug myself out of what once seemed like a desperate situation.  It was only after I had paid off all of my credit cards and established an emergency fund back in 2013 that I began aggressively started putting money aside for retirement.

Source: 123rf.com
Image ID : 129764462
Copyright : Romolo Tavani

 

The fact is, we are living in uncertain times and need to be prepared for whatever hits.  By buttressing our financial health, getting creative with income streams, and following a budget, we will be better equipped to survive the ebb and flow of the current economy.

Why Long-Term Care Coverage Is Vital

The chances of you being in a position in which you can no longer take care of yourself are staggering. Seventy percent of people over the age of 5 will need some type of long-term care at some point, with 20 percent of them requiring it for a period of more than five years. If you have disability insurance, that doesn’t cover long-term care. I have heard some people grumble about the cost of long-term care insurance, which averages about $2,000 for a healthy, single 55-year old. The policy I have had in place since 2004 has premiums which will total $2,700 for 2017, and the premiums will increase to almost $2,900 next year. However, that’s a fraction of what I would have to pay if I didn’t have the insurance. The Genworth (the company I have my policy under) 2016 Cost of Care Survey reported that median annual cost of an assisted living facility is almost $44,000, and the median monthly cost of a private nursing home room is over $90,000.

I signed up for my policy shortly after my mother suffered from, and survived, a brain aneurysm in 2004. She was in a skilled nursing facility from 2006 until 2013, then was transferred into an assisted living facility. In a way, luck was on her side, because she had no financial resources and qualified for Medicaid and Medicare. She is now a participant in the ALW program. However, the bulk of her monthly Social Security benefit (less than $1,200) goes to the facility in which she resides. In no way was I willing to take the chance of relying on a government agency to rescue me in my elderly years if I find myself in need of long-term care.

I HIGHLY recommend securing long-term care insurance if you are over the age of 30. You cannot rely on the government to come to your aid if you end up requiring long-term care, and it’s unfair of you to expect loved ones to carry the financial burden of your care.