Prepping for a new baby’s arrival might kick your nesting instinct into high gear, as you make sure everything is just right before the big day. One thing to add to your new-baby to-do list is figuring out how to financially prepare for maternity leave if you’ll be taking time away from work.
Lauren Mochizuki, a nurse and budgeting expert at personal finance blog Casa Mochi, took time off from work for the births of both her children. Because she had only partial paid leave each time, she says a budget was critical in making sure money wasn’t a source of stress.
“The purpose of budgeting for maternity leave is to have enough money saved to replace your income for your desired leave time,” Mochizuki says.
But the question “How do I budget for maternity leave?” is a big one. One thing’s for sureâthe answer will be different for everyone, since not everyone’s leave or financial situation is the same. What matters most is taking action early to get a grip on your finances while there’s still time to plan.
Before you get caught up in the new-baby glow, here’s what you need to do to financially prepare for maternity leave:
1. Estimate how long you’ll need your maternity budget to last
To financially prepare for maternity leave, you need to know how long you plan to be away from work without pay.
The Family and Medical Leave Act (FMLA) allows eligible employees up to 12 weeks of job-protected, unpaid leave from work per year for certain family and medical reasons, including for the birth of a child. Some employers may also offer a period of paid leave for new parents.
When estimating how long you’ll need your maternity budget to last, Mochizuki says to consider how much unpaid leave you plan to take based on your personal needs and budget. For example, you could find you’re not able to take the full period offered by FMLA after reviewing your expenses (more on that below) and how much you have in savings.
Even if your employer does offer paid maternity leave, you may decide to extend your time at home by supplementing your paid leave with unpaid time off, Mochizuki says.
Keep in mind that despite all of your budgeting for maternity leave, your health and the health of your baby may also influence how much unpaid time off you take and how long your maternity leave budget needs to stretch.
As you’re financially preparing for maternity leave, make sure your spouse or partner is also considering what benefits may be available to them through their employer. Together you should know what benefits are available for maternity or paternity leave, either paid or unpaid, and how to apply for them as you jointly navigate the budgeting for maternity leave process. You can then decide how to coordinate the amount of time each of you should take and when that leave should begin.
Contact your HR department to learn about your company’s maternity leave policy, how to apply for leave and whether there are any conditions you need to meet to qualify for leave. Ask if you’re able to leverage sick days, vacation days or short-term disability for paid maternity leave.
2. Babyproof your budget
When budgeting for maternity leave, make sure you review your current monthly budget to assess how budgeting for a new baby fits in.
In Mochizuki’s case, she and her husband added a category to save for maternity leave within their existing budget for household expenses (e.g., mortgage, utilities, groceries).
“We treated it as another emergency fund, meaning we had a goal of how much we wanted to save and we kept working and saving until we reached that goal,” Mochizuki says.
As you financially prepare for maternity leave, consider the following questions:
What new expenses need to be added to your budget? Diapers, for instance, can cost a family around $900 per year, according to the National Diaper Bank Network. You may also be spending money on formula, bottles, wipes, clothes and toys for your new one, all of which can increase your monthly budget. And don’t forget the cost of any new products or items that mom will need along the way. Running the numbers with a first-year baby costs calculator can help you accurately estimate your new expenses and help with financial planning for new parents.
Will any of your current spending be reduced while you’re on leave? As you think about the new expenses you’ll need to add when budgeting for maternity leave, don’t forget the ones you may be able to nix. For example, your budget may dip when it comes to commuting costs if you’re not driving or using public transit to get to work every day. If you have room in your budget for meals out or entertainment expenses, those may naturally be cut if you’re eating at home more often and taking it easy with the little one.
3. Tighten up the budgetâthen tighten some more
Once you’ve evaluated your budget, consider whether you can streamline it further as you financially prepare for maternity leave. This can help ease any loss of income associated with taking time off or counter the new expenses you’ve added to your maternity leave budget.
Becky Beach, founder of Mom Beach, a personal finance blog for moms, says that to make her maternity leave budget workâwhich included three months of unpaid leaveâshe and her husband got serious about reducing unnecessary expenses.
Cut existing costs
As you budget for maternity leave, go through your existing budget by each spending category.
“The best tip is to cut costs on things you don’t need, like subscriptions, movie streaming services, new clothes, eating out, date nights, etc.,” Beach says. “That money should be earmarked for your new baby’s food, clothes and diapers.”
Cutting out those discretionary “wants” is an obvious choice, but look more closely at other ways you could save. For example, could you negotiate a better deal on your car insurance or homeowner’s insurance? Can you better plan and prep for meals to save money on food costs? How about reducing your internet service package or refinancing your debt?
Find ways to earn
Something else to consider as you budget for maternity leave is how you could add income back into your budget if all or part of your leave is unpaid and you want to try and close some of the income gap. For example, before your maternity leave starts, you could turn selling unwanted household items into a side hustle you can do while working full time to bring in some extra cash and declutter before baby arrives.
Reduce new costs
As you save for maternity leave, also think about how you could reduce expenses associated with welcoming a new baby. Rather than buying brand-new furniture or clothing, for example, you could buy those things gently used from consignment shops, friends or relatives and online marketplaces. If someone is planning to throw a baby shower on your behalf, you could create a specific wish list of items you’d prefer to receive as gifts in order to offset costs.
4. Set a savings goal and give every dollar a purpose
When Beach and her husband saved for maternity leave, they set out to save $20,000 prior to their baby’s birth. They cut their spending, used coupons and lived frugally to make it happen.
In Beach’s case, they chose $20,000 since that’s what she would have earned over her three-month maternity leave, had she been working. You might use a similar guideline to choose a savings goal. If you’re receiving paid leave, you may strive to save enough to cover your new expenses.
As you make your plan to save for maternity leave, make sure to account for your loss of income and the new expenses in your maternity leave budget. Don’t forget to factor in any savings you already have set aside and plan to use to help you financially prepare for maternity leave.
Once you’ve come up with your savings target, consider dividing your maternity savings into different buckets, or categories, to help ensure the funds last as long as you need them to. This could also make it harder to overspend in any one category.
For instance, when saving for maternity leave, you may leverage buckets like:
Planned baby expenses
Unexpected baby costs or emergencies
Mother and baby healthcare
“The purpose of budgeting for maternity leave is to have enough money saved to replace your income for your desired leave time.”
Budgeting for maternity leaveâand beyond
Once maternity leave ends, your budget will evolve again as your income changes and new baby-related expenses are introduced. As you prepare to go back to work, review your budget again and factor in any new costs. For example, in-home childcare or daycare may be something you have to account for, along with ongoing healthcare costs for new-baby checkups.
Then, schedule a regular date going forward to review your budget and expenses as your baby grows. You can do this once at the beginning or end of the month or every payday. Take a look at your income and expenses to see what has increased or decreased and what adjustments, if any, you need to make to keep your budget running smoothly.
Budgeting for maternity leave takes a little time and planning, but it’s well worth the effort. Knowing that your finances are in order lets you relax and enjoy making memoriesâinstead of stressing over money.
The post What You Need to Know About Budgeting for Maternity Leave appeared first on Discover Bank – Banking Topics Blog.
Full coverage car insurance covers you for most eventualities, but it is also expensive. You get what you pay for, and in this case, what you pay for is liability coverage, collision coverage, and comprehensive coverage.
The question is, how essential are all of these coverage options and at what point do they become surplus to requirements?
Your insurance coverage is never set in stone. You can increase your coverage as needed and drop coverage when it is no longer needed. Staying on top of everything is just a case of making the right choices at the right time.
What is Full Coverage Auto Insurance?
There are several different types of auto insurance, each covering you for something different. The most important cover is something known as liability insurance, which spans bodily injury and property damage and covers you when you injure another driver or their property.
Liability insurance is required in nearly all states and there are minimum coverage limits in all of them. To make sure you are legal, you need to meet these limits. If you want additional liability cover to protect your personal assets, you can pay more and aim higher.
Collision coverage and comprehensive coverage are also required if you want full coverage car insurance. With collision insurance, you are protected against damage caused to your own property, whether that damage is the result of a road traffic accident or a collision with a wall or guardrail. As for comprehensive insurance, it protects you against vandalism, theft, weather damage, and most of the things not covered by collision insurance.
A full coverage policy should also include some personal injury protection (PIP) cover, whether in the form of medical payments coverage or personal injury protection coverage. Both are designed to help you with medical bills and other expenses resulting from personal injury, while PIP goes one step further and covers you for transportation costs, childcare expenses, and loss of work.
All of these options are part of a full coverage insurance policy. There are also many additional coverage options and add-ons, but these aren’t necessarily part of a full coverage policy and, in most cases, need to be added for an extra cost. These options include:
Uninsured/Underinsured Motorist Coverage: Minimum cover car insurance won’t protect you if you are hit by an uninsured driver. It has been estimated that as many as 13% of all drivers on US roads are not insured and, in some states, this climbs as high as 25%. With uninsured motorist coverage, you will be protected for such eventualities.
Gap Insurance: When you purchase a brand new car on finance, the lender will often insist on gap insurance. A car depreciates rapidly and if that depreciation drops the value below the balance of the loan, the lender stands to lose out. Gap insurance protects them against such an outcome and covers the difference to make sure they get their money back if the car is written off.
New Car Replacement: A new car replacement policy will do exactly what the name suggests, providing you with a new vehicle in the event your current one is written off. Depending on the insurer, there will be limits concerning the age of the vehicle and the number of miles on the clock.
Roadside Assistance:Â With roadside assistance, you will be covered for essential services if you break down by the side of the road. It typically includes tire changes, fuel delivery, towing, lost key replacement, and more.
Pet Injury:Â What happens when your pet gets injured during a road traffic accident? If you have pet insurance, they will be covered through that. If not, many providers will give you a pet injury insurance add-on.
Rental Car Reimbursement:Â If your car is stolen or getting repaired, rental car reimbursement coverage will help you to cover the costs of a short term rental. This insurance option is often fixed at a daily sum of between $50 and $100 and lasts for no more than 30 days.
Accidental Death: A type of life insurance that focuses on accidents, paying a death benefit to a beneficiary when a loved one dies in an accident.
When to Drop Full Car Insurance Coverage
The value of the car you drive, along with your insurance rates and your driving record, will impact whether or not you should drop full coverage auto insurance. Take a look at the following examples to discover when this might be the right option for you:
1. Your Insurance Premiums are too High
If your car insurance rates are higher than the size of a payout following an accident, it might be time to trim the fat. Insurance is a gamble, a form of protection. You pay a small sum of money in the knowledge that you’ll be covered for a large sum if something untoward happens. But if you reach a point when your premiums begin to exceed the potential payout, it’s no longer useful.
2. You Have an Old Car
The lower your car’s value, the less you need full coverage car insurance. If you’re driving around in a car that costs less than $1,000 and you’re paying $2,000 for the pleasure, you may as well be throwing your money down a wishing well.
In the event of an accident, you’ll have a deductible to pay and that deductible could be near the value of the car. In such cases, it will nearly always make more sense to stick with minimum insurance and to just scrap your car if anything serious happens.
3. You Have a Large Emergency Fund
An emergency fund is a sum of money you keep to one side to cover you for emergencies, including job issues, medical bills, broken appliances, and car troubles. If you have such a fund available, you have a few more options at your disposal and can consider dropping full coverage.
It will save you money in the long term and if anything happens in the short term, you still have options and won’t be completely financially destitute.
Bottom Line: When It’s Needed
While there are times when full coverage is unnecessary and excessive, there are also times when it is essential. If you have a new car, for instance, you should get all of the cover you can afford, otherwise, you could be seriously out of pocket following an accident or theft.
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When Should you Drop Full Coverage on your Car? is a post from Pocket Your Dollars.
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Weâre big on investing. Itâs an important way to grow your money and set yourself up for retirement someday.
But is it dangerous to be too obsessed with the stock market?
You bet it is. Our financial advice columnist, Dear Penny, recently heard from a reader whose husband stopped funding his 401(k) so he can bet on the stock market, instead.
Is it OK that heâs stopped contributing to his 401(k) so he can trade stocks? the reader asked. How do I ask him what heâs actually investing in? Iâm worried that heâs gambling money that we need for our retirement.
Thatâs not the way to go. Here are five safer ways to invest and grow your money.
1. Just Steadily Invest Like a Normal Person
Instead of betting all your money on the stock market, just steadily invest in it. Take the long view. The stock market is unpredictable, which means that sometimes stock prices go up, and sometimes they go down â but over time, they tend to go up.
If you havenât started investing and have some money to spare, you can start small. Investing doesnât require you throwing thousands of dollars at full shares of stocks. In fact, you can get started with as little as $1.*
We like Stash, because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by breaking them down into categories based on your personal goals. Want to invest conservatively right now? Totally get it! Want to dip in with moderate or aggressive risk? Do what you feel.
Plus, with Stash, youâre able to invest in fractions of shares, which means you can invest in funds you wouldnât normally be able to afford.
If you sign up now (it takes two minutes), Stash will give you $5 after you add $5 to your invest account. Subscription plans start at $1 a month.**
2. Grow Your Money 16x Faster â Without Risking Any of It
Save some of your money in a safer place than the stock market â but where youâll still earn money on it.
Under your mattress or in a safe will get you nothing. And a typical savings account wonât do you much better. (Ahem, 0.06% is nothing these days.)
But a debit card called Aspiration lets you earn up to 5% cash back and up to 16 times the average interest on the money in your account.
Not too shabby!
Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for âthis is totally safe.â
3. Stop Paying Your Credit Card Company
One way to make sure you have more money is to stop wasting money on credit card interest. Your credit card company is getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.
If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
The benefit? Youâll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), youâll get out of debt that much faster. Plus: No credit card payment this month.
AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.
It takes two minutes to see if you qualify for up to $50,000 online. You do need to give AmOne a real phone number in order to qualify, but donât worry â they wonât spam you with phone calls.
4. Cut Your Bills by $540/Year
Another way to grow your money: Stop overpaying on your bills.
For example, whenâs the last time you checked car insurance prices? You should shop your options every six months or so â it could save you some serious money. Letâs be real, though. Itâs probably not the first thing you think about when you wake up. But it doesnât have to be.
A website called Insure makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and itâll show you your options â and even discounts in your area.
Using Insure, people have saved an average of $540 a year.
Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.
5. Add $225 to Your Wallet Just for Watching the News
Hereâs a safe way to earn a little cash on the side.
Weâre living in historic times, and weâre all constantly refreshing for the latest news updates. You probably know more than one news-junkie who fancies themselves an expert in respiratory illness or a political mastermind.
And research companies want to pay you to keep watching. You could add up to $225 a month to your pocket by signing up for a free account with InboxDollars. Theyâll present you with short news clips to choose from every day, then ask you a few questions about them.
You just have to answer honestly, and InboxDollars will continue to pay you every month. This might sound too good to be true, but itâs already paid its users more than $56 million.
It takes about one minute to sign up, and start getting paid to watch the news.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He tries not to be obsessed with the stock market.
*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.
**Youâll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Insurance companies determine risk when calculating rates and offering coverage. If the company determines that your accident risk is higher than average, you’ll have to purchase high-risk auto insurance. Since companies base rates on risk, you can expect to pay more for coverage if you need high-risk insurance.Â
Find out why you might need high-risk insurance, how you can lower your premiums, and more. Then you’ll be ready to shop for high-risk auto insurance if necessary.Â
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Reasons for High-risk Auto Insurance
Insurance companies look at various factors when determining risk. You might need high-risk insurance if you:
Have lots of at-fault accidents on your recordÂ
Have a large number of speeding ticketsÂ
Have reckless driving or racing violations
Have been convicted of driving under the influence
Are a young, inexperienced driver, or are over 65 years oldÂ
Have bad creditÂ
Use the vehicle for a ridesharing service or another high-risk activityÂ
Drive a high value or specialized car
Had your license suspended or revoked
Let your insurance lapseÂ
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Lowering Your Risk
If you’ve been flagged as a high-risk driver, there are some things you can do to reduce your risk in the eyes of the insurance company. Reducing your risk can lead to lower premiums.
First, if you are high risk due to moving violations, take a defensive driving course. Speak with your insurance agent before taking a class to ensure it’s approved, though.Â
Also, practice safer driving behaviors while on the road. Follow the speed limit and obey all laws. After you hit the three-year mark without any tickets, your premium should decrease.
If you’re high-risk because of a DUI conviction, speak to your insurance company about installing an interlock ignition device. While most companies will not reduce the rates, some will, so it’s worth exploring.Â
Improving your credit score can also lower your premiums. Some insurance companies charge more for bad credit scores, so make your payments on time and reduce your credit-to-debt ratio. Â
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SR-22 Certificate and High-risk Insurance
If you require high-risk auto insurance because your policy lapsed, or your license was suspended or revoked, you might need an SR-22 certificate. This certificate is not insurance. Instead, it is proof that you have the required liability insurance. Your insurance company will issue the certificate and send it to the necessary state office on your behalf.Â
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High-risk Insurance Restrictions
Some high-risk policies include restrictions. For example, you might be the only person protected when driving your vehicle. If someone else drives your car, he or she won’t be covered. Also, if you are in an accident and the court assesses punitive damages, your policy might not cover it. Finally, the company might review your driving history annually and increase your rates if you have any infractions.Â
Because of these restrictions and the high cost of coverage, work hard to reduce your risk, so you can get a standard policy soon.Â
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Getting High-risk Insurance
Finding high-risk auto insurance is a bit harder than purchasing a standard policy. Some major insurance providers offer high-risk coverage, so you can begin shopping there. However, you might have to use a company that specializes in these policies. When you choose such a company, you’re less likely to get turned down for insurance.Â
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Compare Quotes
As with any insurance policy, you should compare quotes before purchasing high-risk coverage. Companies use different formulas for assessing risk. One company might see you as extremely high risk, while another might view your risk at a moderate level, meaning you’ll pay less. After you compare quotes, you can purchase your policy and hit the road once again.
What Is High-risk Auto Insurance?  is a post from Pocket Your Dollars.
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Take a moment. Think about being your best self â living your best life.
What do you really want to do with your life? Raise a happy family? Travel the world? Buy a nice house? Start your own business?
Reality check: To accomplish any of those things, youâre going to need to know how to save money.
Unfortunately, Americans are bad at saving money, and weâre getting worse. Thanks to rising costs, stagnant salaries and student loan debt, weâre saving less than ever.
Table of ContentsÂ
Step 1: Develop Savings Goals and Strategies
Step 2: Pick Budgeting and Debt Repayment Methods
Step 3: Choose a Financial Institution and Accounts
Step 4: Automate Your Finances
Step 5: Establish a Budget-Conscious Lifestyle
Step 6: Make More Money
Here Are Our Best Tips to Save Money
Are you ready to actually start saving money? What youâre reading is a step-by-step guide on how to do it â how to come up with savings strategies, choose a budgeting method, pick the right financial institution, automate your finances and live a budget-conscious lifestyle.
Pour yourself a cup of coffee and buckle up. Itâs time to get serious about this.
Step 1: Develop Savings Goals and Strategies
Youâre probably asking yourself, âHow much should I save?â
Your first move is to set specific savings goals for yourself â emphasis on specific. Naming your goals will make them more real to you. Itâll help you resist the temptation to spend your money on other stuff.
Think Long Term and Short Term
What exactly do you want to save money for? How much will you need to save? And what do you need to save for first? Think short- and long-term:
Short-term: Save for a real vacation or nice holiday gifts. But first, save enough to have a decent emergency fund â three to six monthsâ worth of living expenses, in case you run into an unexpected car-repair bill or lose your job, for example.
Long-term: This involves big-picture thinking. Here, youâre saving money for things like your childrenâs college fund or for your retirement plan.
Analyze Your Income
How much can you realistically save for these goals, now that youâre making them a priority?
Write down your income and expenses â all of your expenses, from utility bills to your Netflix subscription. There are probably more ways to save money than you realize. Donât forget your student loans or credit card debt. Make sure you know what youâre spending in every budget category. Pay special attention to what youâre spending on non-essentials, such as eating out.
An easy way to automate this process is to use Trim, a little bot thatâll keep track of all your transactions.
Connect your checking account, credit card and savings account for a big-picture look at your spending habits. Then, take a closer look by checking out each of your transactions. Set alerts thatâll let you know when bills are due, when youâve hit a spending cap or when youâve (hopefully not) overdrafted. This will help you stick with your savings plan.
Check in on Your Credit
Do your own credit check. Keeping tabs on your credit score and your credit reports can help guide you to a financially healthier life â especially if you use a free credit-monitoring service like Credit Sesame. It gives you personalized suggestions for improving your credit.
The better your credit, the better off youâll be when youâre getting a home or car loan. Credit Sesame can estimate how big a mortgage you might qualify for, for example.
Hereâs our ultimate guide to using Credit Sesame.
Step 2: Pick Budgeting and Debt Repayment Methods
Itâs time to start making a monthly budget and sticking to it â especially if you have debt.
This way, you can put savings right into your budget. Itâs never an afterthought.
Here are five different budgeting methods. We canât tell you which one to choose. Be honest with yourself, and choose the one you think is most likely to work for you. This is how to save money on a tight budget.
The 50/30/20 Rule
This one was popularized by U.S. Sen. Elizabeth Warren, a bankruptcy expert, and her business-executive daughter Amelia Warren Tyagi.
Split your income into three spending categories: 50% goes to essential bills and monthly expenses, 20% toward financial goals and 30% to personal spending (all the stuff you like to spend money on but donât really need). Put the money earmarked for your financial goals into a separate savings account.
Good for: People who worry they wonât have a life if theyâre on a budget. Hereâs our complete guide to 50/30/20 budgeting.
Envelope Budgeting
So-called envelope budgeting is traditionally a cash-only budget. Every month, you use cash for different categories of spending, and you keep that cash for each category in separate envelopes â labeled for groceries, housing, phone, etc.
Prefer plastic? Hereâs our review of Mvelopes, an app that lets you digitize this method.
Good for: People who know they need help with self-control. If thereâs nothing left in one envelope toward the end of the month, thereâs no more money to spend on that category, period.
Zero-Based Budget
Hereâs how you draw up this budget: Your income minus your expenses (including savings) equals zero. This way, you have to justify every expense.
Good for: People who need a simple, straightforward method that accounts for every dollar. Hereâs our guide to the zero-based budget.
Debt Avalanche
This debt-repayment method helps you budget when you have debt. Pay off your debts with the highest interest rates first â most likely your credit cards. Doing that can save you a lot of money over time.
Good for: People with a lot of credit card debt. Credit cards generally charge you higher interest than other lenders do. Learn more about the debt avalanche method here.
Debt Snowball
Money management guru Dave Ramsey champions the debt snowball method of debt repayment. Pay off your debts with the smallest balances first. This allows you to eliminate debts from your list faster, which can motivate you to keep going.
Good for: People who owe a lot of different kinds of debts â credit cards, student loans, etc. â and who need motivation. Hereâs how to use the debt snowball method to eliminate debt.
FROM THE DEBT FORUM
Eviction on credit report
Helping Covid-19 Victims
Struggling to pay debt or going bankrupt
Can’t afford car loan
See more in Debt or ask a money question
Step 3: Choose a Financial Institution and Accounts
You might be thinking, I already have a bank. And of course you do. If youâre like most of us, youâve had the same bank for years.
Most people donât give this a second thought. They figure itâs too inconvenient to switch. But itâs worth shopping around for a better option, because where you bank can make a real difference in how much you save.
What to Look for in a Bank Account
Does your checking account pay you interest? What are the fees like? What other perks does it offer?
Did you know the biggest U.S. banks are collecting more than $6 billion a year in overdraft and ATM fees?
Maybe itâs time to try another financial institution. Weâve found some great online bank accounts to help you avoid fees and get features you wonât find with the brick-and-mortar banks.
Hereâs one example: Thereâs a mobile baking app called Varo Money.
The FDIC reports that the average savings account pays a paltry .08% APY*, but when you open an online checking and savings account with Varo, it will pay you more than 20 times that amount on your savings account.Â
We know opening a new bank account isnât exactly everyoneâs idea of fun, but Varo makes it easy. You can open an account with just a penny, and more than 750,000 people have already signed up.
Oh, and there are no monthly fees.Â
Want more options? Hereâs our ultimate guide to help you choose the right account.
To free up more money for savings, try to spend less paying interest on your debts â especially if you have high-interest credit card debt.
These days, credit card interest rates often climb north of 20%. How can you avoid paying all that interest? Your best bet is to cut back on your expenses and pay off your balance as soon as you realistically can.
Start by using the right credit card for you, based on your situation and needs. Would you prefer a card that gives you cash back or travel incentives, a balance-transfer card, or a card thatâll help you build credit?
Also consider paying off your high-interest debt with a low-interest personal loan. Itâs easier than you might think. Go window-shopping at an online marketplace for personal loans. Here are some weâve test-driven for you:
AmOne allows you to compare rates side-by-side from multiple lenders who are competing against each other for your business. Itâs best for borrowers who have good credit scores and just want to consolidate their debt.
Fiona is also a marketplace but allows you to borrow more money and borrow it for a longer period of time â if thatâs what you want to do.
Upstart tends to be helpful for recent grads, who have a young credit history and a mound of student debt. It can help you find a loan without relying on only your conventional credit score.
Step 4: Automate Your Finances
Thatâs right. Weâre deep into the 21st century, here, so make technology do the work for you.
The best ways to save include automation. Youâll save time, and time is money. Here are a few money-management steps you can take today to ensure you wonât have to think about money for more than a few minutes every month.Â
Automate Bill Pay
Most bills are paid online now, reports the Credit Union Times. But you can take it a step further. Set it up so youâll receive and pay all of your bills online through your bank. That simplifies things so youâll never miss a payment.
Hereâs how: Go to your bankâs online bill-pay feature. Enter all the companies that bill you, and the account numbers for each. Arrange to receive e-bills from whichever billers will do that.
You can also have your bank send digital payments to individuals (like a landlord).
Automate Savings
Whatever you need done financially, thereâs an app for that. Weâve put several to the test.
Digit is an automated savings platform that calculates how much money you can save. Hereâs our review of Digit.
Long Game Savings combines online games and saving money.
Also, see whether your bank offers automatic savings transfers that will move money from your checking account to your savings account each month.
Automate Investing
You donât have to be Warren Buffett to be an investor. You donât even have to follow the stock market, read The Wall Street Journal or watch CNBC.
You can take advantage of these apps offering easy, automatic ways to start investing â the âset it and forget itâ method. Theyâre useful for tricking your brain into saving more. Youâll do it without even realizing youâre doing it.
Stash lets you start investing with as little as $5 and for just a $1 monthly fee for balances under $5,000. Bonus: Penny Hoarders get $5 just for signing up!
Acorns connects to your checking account, credit and debit cards to save your digital change. It automatically rounds up purchases with your connected cards and invests the digital change into your chosen portfolio. Bonus: Penny Hoarders get $5 just for signing up! Read our full review of Acorns here.
Blooom is a company that offers a free âhealth check-upâ for your 401(k). Then, for only $10 a month (Penny Hoarders get the first month free!), itâll optimize and manage your retirement savings for you. See how Blooom helped one Penny Hoarder make the most of her 401(k).
Automate Budgeting
You can automate your budget, too. Thereâs an app for that. Actually, weâve found several.
Charlie is a money-saving penguin who lives in your SMS text messages or Facebook Messenger (your choice, though Charlie is more fun and reliable on Messenger). He helps you save money through things like making sure youâre getting the best deals around (ahem, overpaying $24 a month on that cell phone bill?).
Mint lets you see all your accounts, cards, bills and investments in one place.
Medean for iOS ranks your finances based on how they stack up to those of people of similar age, income, location and gender. It calls itself a âhealth index for your finances,â and helps assess your situation and find ways to save money.
MoneyLion offers rewards to help you develop healthy financial habits and will literally pay you for logging onto the app. You can earn points in the rewards program by paying bills on time, connecting your bank account or downloading the mobile app.
Step 5: Establish a Budget-Conscious Lifestyle
Hereâs the harsh reality: To save more money, youâll need to spend less money. (Or make more money, but weâll get to that next.)
That doesnât mean you have to live like a monk. Nor do you have to survive on ramen noodles and the dollar menu, wear scuffed shoes and patchy clothes, or cut your own hair with hedge clippers.
You just have to be smart and strategic. Here are some of our best tips to help you spend less:
Save Money Around the House
Your home is your castle. But castles are so, like, expensive. Fortunately, there are lots of ways to save money around the house.
Your priciest purchases â like appliances and furniture â are a natural place to look for savings. Try repairing your appliances instead of replacing them. And hereâs a good list of other tricks for saving on furniture and appliances.
The cost of cooling, heating and lighting your home is massive. Try installing thermal curtains and a programmable thermostat. Or check out these creative, energy-saving ways to slash your utility bills.
Find Free Entertainment
Entertainment can cost an arm and a leg. But hey, we have to live, right? So do it for free! Next time youâre planning a night out, take advantage of one of these free date nights or group outings.
If youâre going to stay in, cut the cord. More and more people are doing this, because their cable bill has gotten so expensive.
If youâre thinking of switching to an online streaming service and youâre wondering which would be best, weâve got you covered with our comparison of Netflix, Prime Video and Hulu. We compared costs, type of content, number of available titles and more.
You also should reconsider that gym membership if youâre not really using it.
Cut Your Food Budget
Groceries are a huge part of everyoneâs budget, so theyâre a big target for savings. Next time youâre putting together your shopping list, make sure to check out our favorite tricks to save money at the grocery store:
Look for free printable coupons.
Compare your local grocery prices using this worksheet.
Ibotta pays you cash back on purchases if you take pictures of your grocery store receipts. Plus, youâll get a $10 bonus for signing up!
Scan grocery storesâ websites for deals and hit more than one store.
Not loving the supermarket? Nearly 70% of us say we spend too much on take-out or going out to eat. Hereâs how to save money at restaurants, too.
Find out If Youâre Wasting Money on Insurance
Buying insurance can be confusing and overwhelming, because there are so many options.
Hereâs how to find affordable insurance:
For Your Car: Auto Insurance
Here are the blunt facts about how to get lower car insurance premiums: Have fewer accidents, get fewer traffic tickets and boost your credit score.
Automotive experts also gave us the following tips:
Buy a used car.
Participate in your insurerâs safe-driving program.
Shop around for better rates. One easy way is The Zebra, a car insurance search engine that compares your options from more than 200 providers in less than 60 seconds. Hereâs how one guy is saving $360 this year on car insurance because of The Zebra.
For Yourself: Health Insurance
Letâs face it: Health insurance can be confusing and intimidating.
If youâre buying insurance for yourself, start with the federal health insurance marketplace at Healthcare.gov to see whether you qualify for any discounts or assistance.
Finding affordable health care coverage is a huge challenge for freelancers. Hereâs how to get covered if youâre self-employed.
For Your Family: Life Insurance
Life insurance pays your dependents a set amount of money if you die. Whether to buy it is a judgment call.
Life insurance is considered more important if youâre married or have children. You might also want a basic policy that would pay off your funeral, mortgage or other debt.
Youâll probably be asked to choose between two options: term or universal life insurance. If youâre like most of us, youâll choose term â the simplest, cheapest and most popular kind of life insurance policy.
To help you save money and navigate this complicated industry, modern companies are updating the old model:
Policygenius is an online-only platform that offers instant quotes from top carriers to help you make a quicker decision. Once you choose a life insurance company, you can apply right online, and a Policygenius rep will give you a quick call to ask a few follow-up questions.
Haven Life can insure you quickly based just on the health information you provide online.
Ethos can get you term life insurance in less than 10 minutes â with no medical exam â for coverage up to $1 million. Ethos offers a digital application, and customer service is available if you have questions.
Step 6: Make More Money
How can you increase your income? Itâs easier to save money if youâre bringing in more money to begin with.
Here are a couple of simple ways to make extra cash at home:
Share Your Opinion
You wonât get rich taking surveys, but if youâre just vegging out on the couch, why not click a couple buttons and earn a few bucks? Weâve tried a lot of paid survey sites, and two of the best weâve found are My Points and InboxDollars.
Clear Your Closets
Sell your old stuff! Use the Decluttr app to get paid for your old DVDs, Blu-Rays, CDs, video games, gaming consoles and phones.
You can also sell nearly anything through the Letgo app. Just snap a photo of your item and set up a listing in about 30 seconds. If you have more free time, try selling items on Craigslist or eBay.
Find a Side Gig
For our best ideas to boost your bottom line, check out the following:
Unique ways to make money at home.
How to make extra money online.
How to earn passive income.
The Penny Hoarderâs continually updated page on open work-from-home jobs.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. Heâs slowly getting better about saving money.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
A pay cut, whether big or small, can catch you off guardâand throw your finances into disarray. While a salary cut is different than a layoff, it can leave you feeling just as uncertain.
How do you deal with a pay cut and deal with this uncertainty?
There are strategies to help you navigate both the emotional and financial challenges of this situation. One key element? A budget. Whether you need to create a budget from scratch or adjust the budget you already have, doing so can help you get back on your feet and set yourself up for success.
Hereâs a rundown of budgeting tips to survive a pay cut to keep your finances intact:
Ask your employer for the parameters of the income reduction or salary cut
First, keep in mind that a pay cut typically isnât personal. According to Scott Bishop, an executive vice president of financial planning at a wealth management firm, businesses often cut salaries to preserve their cash reserves while they stabilize their cash flow or weather some larger economic impact, like the coronavirus pandemic.
Secondly, make sure you understand the full scope of the salary cut. Bishop suggests you ask your employer questions like:
What is the amount of pay being cut?
Why is pay being cut?
When will the reduction begin, and how long will it last?
Will any of the following be affected?
401(k) match
Healthcare or insurance costs
Employer-sponsored training or continuing education opportunities
Hours or job responsibilities
What are the long-term plans to improve the companyâs financial situation?
Once youâve painted the full scope of what and why, you can determine how to handle the pay cut.
âFor some people who are big savers, it might not be a big deal,â Bishop says. âBut for some people who live paycheck to paycheck, itâs going to be significant.â
Settle any anxieties that might come with a salary cut
If you are dealing with financial stress, try settling your mind and emotions so you can make decisions with a clear head.
âThe emotional and mental toll can be one of the hardest parts,â says Lindsay Dell Cook, president and founder of Budget Babble LLC, which provides personal finance and small business financial counseling. âIt gets even harder if there are others depending on your income who are also financially stressed.â
When sharing the news with family members who may also be impacted, Cook suggests the following:
Find the right time. Pick a time of day during which everyone will have the highest mental capacity for the conversation. âFor instance, I am a morning person, so if my husband told me at bedtime about a pay cut, I would have a much harder time processing that information,â Cook says.
Frame it as a brainstorming session. Bring ideas of what you can do to handle the pay cut, such as a list of expenses you can cut or a plan for how you can make extra income.
Empathize with the other person. âReduced income is not easy for anyone. Everyone responds to financial anxiety differently,â Cook says.
“If youâre unable to maintain your previous level of saving after a pay cut, try to save at a smaller scale for goals like retirement and your emergency fund.”
Create or adjust your budget to handle a pay cut
Once you understand the salary cut and have informed your family or roommates, itâs time to crunch the numbers. Thatâs the first step to figuring out how to save money after a pay cut.
If you donât have a budget, find a budgeting system that fits your needs. Learning how to effectively budget takes time and practice, so be patient with yourself if youâre new to this. Cook suggests reading up on how to create a budget.
One system to consider is the 50-20-30 budget rule, which has you break your spending into three simple categories. If you prefer the aid of technology when determining how to handle a pay cut, there are many budgeting and spending apps that can help you manage your money.
Whether youâre handling a pay cut by creating a new plan or modifying an existing budget, Bishop suggests taking the following steps:
Add up your income. Combine your new salary with your partnerâs pay, and factor in any additional income streams like from dividends or savings account interest. Tally up the total.
List your expenses. Be sure to include essential expenses (e.g., housing, food, clothing, transportation) and nonessential expenses (e.g., entertainment, takeout, hobbies).
Look through your bank statement online and your past receipts so all expenses are included.
Account for infrequent expenses such as gifts, car maintenance or home repairs.
Track the amount you save. Note any regular savings contributions you make, such as to an emergency fund or retirement account.
Get your partnerâs buy-in. What needs do they have, and what is nonnegotiable in the budget for each of you?
Cut expenses with budgeting tips to survive a pay cut
If youâve crunched the numbers and found that your expenses add up to more than your new income, youâll need to find ways to cut back. Here are some tips on trimming your spending to survive a salary cut:
Cut back on takeout meals and stick to a strict grocery list or food budget, Cook suggests.
Avoid large discretionary purchases like a car during the duration of your pay cut, Bishop says.
Negotiate with your utility companies or ask if theyâre providing forbearance options, Bankrate suggests. You can also ask your car insurance provider if it has additional savings for customers who are driving less, according to Bankrate.
If you think you might fall behind on rent or mortgage payments as youâre handling a pay cut, both Cook and Bishop agree that early, proactive communication is key. Be honest with your landlord or mortgage company. âDonât wait until youâre past due,â Bishop says.
The same applies for other financial obligations, such as your credit card bill. Youâll likely find those companies are willing to work with you through the rough patch.
Cook also suggests you look into municipal assistance programs as a budgeting tip to survive a pay cut. âMany cities have established rental assistance funds to help taxpayers meet their obligations during the pandemic,â she says.
Continue to save money after a pay cut
As you consider how to cut costs, take time to think about your long-term savings goals and how to save money after a pay cut. By cutting discretionary spending through your new budgetâwhat Bishop calls âcutting the fatââyou may have freed up income to maintain your good saving habits during this time. He says itâs important to do that before slowing down on savings.
If youâre unable to maintain your previous level of saving after a pay cut, Bishop suggests you try to save at a smaller scale for goals like retirement and your emergency fund.
As you work to save money after a pay cut, Cook recommends setting up automatic transfers to your savings account every payday based on the amount youâre able to put towards savings in your new budget.
âIf your savings account is at the same bank as your checking account, you can transfer those funds fairly easily,â she says. âSo the worst-case scenario is that you put too much money in savings and have to bring some back to checking. The hope, however, is that some or all of those funds transferred to savings remain there since that money is no longer in your checking account just waiting to be spent.â
Seek extra income sources after a salary cut
You should explore additional sources of income if you need more cash to cover essential expenses or if youâre looking for ways to save money after a pay cut.
Determine if youâre eligible for benefits based on the reason for your pay cut. Cook recommends applying for unemployment if you think you may qualify. For example, some workers who experienced pay cuts due to the coronavirus pandemic were eligible for unemployment benefits. The details vary by state, so visit your stateâs unemployment insurance program website to learn what benefits may apply to you.
If you or your partner have some extra time on your hands, you can consider bringing in income through a side hustle to help you handle your pay cut. Bishop suggests using free or low-cost online video tutorials to boost your existing skills to make your side hustle more effective.
Cook also recommends getting creative. âAre there things you could sell to make some extra cash?â she says.
If you are unable to find additional sources of income, but you have an emergency fund, consider whether you should dip into that. “Your savings are there for a reason, and sometimes you need to use it,” Cook says. “That is okay.”
Stick to your updated budget to navigate how to handle a pay cut
Making your budget part of your daily routine is a budgeting tip to survive a pay cut, and it will help you save money after a pay cut.
âBuild rewards into your budget, such as ordering out every other week if you successfully saved money after your pay cut.â
âIf youâre checking it daily, there are no surprises,â Cook says. You can do this by logging into your bank account and making sure your spending and expenses align with your digital or written budget document.
âIf you see that your spending is high, your mind will typically start thinking through [future] transactions more thoroughly to vet if those expenses are really necessary,â Cook says.
Donât forget the fun side of accountability: rewards for meeting your goals. Build rewards into your budget, Bishop says, such as ordering out every other week if you successfully saved money after your pay cut.
Lastly, donât try to go it alone. Enlist others in your budgeting journey, Cook suggests. Make up a monthly challenge to cut spending from a specific category in your new budget and ask your partner or a friend to do it with you. For example, see if you and the other participants can go a full month without buying clothes or ordering takeout. Compare notes at the end of the month and see how much youâve saved.
Another idea? Try connecting with a budget-minded community on social media to get inspired.
Take these steps after the salary cut is over
Once youâve handled the pay cut and your regular pay is restored, donât give up on your newfound budgeting discipline. Instead, focus on building up emergency savings before you go back to your normal spending.
Bishop recommends starting with enough savings to cover three to six months of expenses. âIf you spend $3,000 a month, that means you need to have $9,000 to $18,000 saved.â
This might also be the time to revisit your budget and build a more extensive financial plan with a CPA or financial advisor to account for all of your future goals. Bishop says that these can include a target retirement date and lifestyle; your estate planning, such as a will, trust and power of attorney; saving for a childâs college; and purchasing a home.
Bishop says reminding yourself why youâre budgeting and focusing on your financial goals can be similar to motivating yourself to stay physically fit. Goal-based motivation can keep you accountable.
Remember: You can survive a salary cut
Handling a pay cut is never easy, but you can get through this time. While youâre in the thick of it, focus on budgeting tips to survive a pay cut and staying positive. Seek help from others and follow up with your employer to make sure you are aware of any changing details regarding the pay cut.
Most of all, try to keep a long-term outlook. âRemember that it will not always be this way,â Cook says.
If youâre considering whether or not to tap into your savings to handle a pay cut, read on to determine when to use your emergency fund.
The post How to Handle a Pay Cut: Budgeting in Uncertain Times appeared first on Discover Bank – Banking Topics Blog.
According to the Consumer Financial Protection Bureau, around 2.3 million car loans originate every year. Car loans can take years to pay off. So when you finally pay it off, you might be wonderingânow what?
What happens when you pay off your car? What should you do with the money you were previously putting towards your monthly payments? Weâve got a few ideas, but keep in mind that everyoneâs finances are different. So while our suggestions might work for some people, they probably wonât work for everyone.
What to Do When You Pay Off Your Car
Firstly, paying off your car loan is a huge accomplishment. So congratulations! Paying off any loan isnât always easy. And now you finally own your car, which is a pretty big deal.
Luckily for you, the hard part is over. But there are still a few steps you should take after you pay off your car.
1. Get Your Car Title
You usually don’t have to take action for this step. In most states, your lender notifies the Department of Motor Vehiclesâor BMV or other equivalent entity in your stateâof the title change. Once the paperwork clears, the title is mailed to you.
Thereâs not much for you to do except keep an eye on the mail. If you donât get your title a few weeks after paying off your loan, call your lender. Youâll need the title if you ever want to sell your car or use it for collateral when applying for credit.
2. Reconsider Your Finances
If you’re paying off a vehicle and not planning to buy another with a new loan, youâll have a little more extra room in your budget. In 2019, new car buyers committed to an average monthly payment of around $550. So when you pay off your car loan, thereâs a good chance youâll have an extra $300 (or more) per month.
You might be tempted to splurge on fun stuff or to make large purchases you’ve been putting off. But unless your transportation situation is radically changing soon, you’ll always need a car. And that means you’ll eventually need to pay for the next one.
Plus, owning a car is expensiveâeven if youâve completely paid it off. Youâll have to your oil changed, new tires and much more. And thatâs just regular maintenance. If you get in even a minor accident, you could have a major repair expense on your hands.
Thatâs why itâs a good idea to put that some of that extra money in savings. If you end up getting a new car eventually, you can pay for all or part of your next vehicle with cash. That reduces how much you have to finance, which can significantly reduce the total cost of your next vehicle. Another option is to use the money to continue to pay down other debt to put yourself in a better financial situation in the future.
It’s also worth putting part of that cash in your short-term savings. You could easily dip into those funds if you need to get any work done on your car. But whatever you plan to do with the money, take the time to look at your personal budget. That gives you a chance to see exactly where this extra money might make the most difference.
3. Notify Your Car Insurance Company
Notify your car insurance company when you’ve paid off your loan so you can remove the lien holder from your policy. You don’t need to wait until you have the title in your hand to make the call.
This step is important because if your financed vehicle were totaled in a wreck, the insurance payment would go to the lender. Once you’ve paid off the car and own it outright, the payment goes to you.
4. Consider Any New Insurance Options
Most states have requirements for what type of coverage you must carry on your car. At minimum in most states, you need bodily injury and property damage liability that will cover the losses of other people if it’s caused in a wreck that is deemed your fault. There are some exceptions to those requirements, though.
But your lender will likely require additional insurance coverage until you pay off the loan. Many lenders require you to also carry comp and collision coverage. This is the part of your insurance policy that pays for damage to yourvehicle if you get into an accident that is deemed your fault.
Lenders require this extra coverage to protect their investment. They want to know that if your car is totaled, they can recover the value that you owe them. Once you pay off the loan, whether or not you carry this level of coverage might be your choice.
Talk to your insurance agent to find out what your options are and if you can save money by changing your insurance coverage. Just remember that if you drop this coverage and get into an accident, you may have to cover the costs of repairs or a new vehicle on your own.
You can also check rates for auto insurance online. In addition to saving money on your monthly vehicle payment, you may be able to save a lot on your insurance coverage.
Does Paying Off Your Car Loan Early Hurt Your Credit?
To get out of debt or change your current car, you might decide to pay off your car loan early. Your credit isn’t penalized by making early payments on debt. However, paying off an entire account can cause a small dip in your credit score temporarily. That’s because open accounts with a positive payment history impact your score more than closed accounts with positive payment histories.
Your wallet might also take a small hit depending on how your loan is structured. Find out if your loan includes any penalties for paying off the principle early before you make a decision to go this route.
A lapse in coverage increases your risk and your rates. It may be harder to find suitable and affordable car insurance and may mean that you need to make some sacrifices in order to keep those insurance premiums at an affordable level. But it’s not a complete disaster and is far from the worst thing you can have on your record.
What is a Gap in Coverage?
A lapse or gap in coverage is a period in which you were not insured. You owned a car during this period but you didn’t meet the state minimum insurance requirements.
In some cases, a gap in coverage can be the result of negligence on your part. You may have allowed your insurance policy to lapse without purchasing a new one or it may have been canceled because you failed to meet your payment obligations.
A lapse in auto insurance coverage can also occur when you are deployed, sent to prison or because you simply didn’t drive during that period.Â
If you fall into the first group, your insurer will notify the Department of Motor Vehicles (DMV), telling them that your car insurance policy has lapsed and you are no longer insured. This will expose you to fines and a host of other problems (see our guide on the penalties imposed on uninsured drivers).
As for members of the military, they can suspend their car insurance coverage when they are on active duty, thus avoiding any rate increases and other problems. The same applies to students studying abroad, although in their case, they will need to contact their DMV first.
What Happens Following a Car Insurance Lapse?
Many states require you to have continuous insurance, which means your auto insurance policy has not lapsed for any period of time. As soon as it lapses, your license and registration may be revoked, and you will need to pay a fee to have these reinstated. These fees, as they apply in each state, are listed below, but it’s worth noting that you may also be hit with additional court fees and fines if you are found to be driving without insurance:
South Carolina: Insurance Lapse Fee = $550 + $5 per day
South Dakota: Insurance Lapse Fee = $78 to $228
Tennessee: Insurance Lapse Fee = $115
Texas: Insurance Lapse Fee = $100
Utah: Insurance Lapse Fee = $100
Vermont: Insurance Lapse Fee = $71
Virginia: Insurance Lapse Fee = $145
Washington: Insurance Lapse Fee = $75
West Virginia: Insurance Lapse Fee = $100
Wisconsin: Insurance Lapse Fee = $60
Wyoming: Insurance Lapse Fee = $50
Will My Car Insurance Rates Increase Following a Gap in Coverage?
In addition to the fines mentioned above, you can expect your auto insurance quotes to be a little higher than before, although this all depends on how long the gap in coverage was.
If it was less than 4 weeks, the rate increase may amount to a few extra dollars a month. If it was longer than 4 weeks, you could find yourself paying 20% to 50% more, depending on your chosen car insurance company.Â
The exact rate of increase will depend on the state, high-risk status, driving record, car insurance discounts, and age of the driver. Insurance is all about measuring risk and probable claims, and an insurance company will look at everything from marital status to DUI convictions when measuring your risk and underwriting your new policy.
Bottom Line: Getting Cheap Car Insurance Quotes After a Lapse
In our research, we found that Progressive, Esurance, and State Farm offered lower rates than GEICO, even though GEICO typically tops the charts when it comes to insurance costs. You should also get much lower auto insurance rates with providers like USAA, providing you qualify.
To save even more, maintain a high credit score, aim for those good driver discounts, and try to secure bundling discounts, which are provided when you combine multiple different insurance products, such as homeowners insurance and car insurance.
The car you drive is also key. A new car will generally lead to much higher rates than a car that is a few years old, as it will be more expensive to repair and replace.
However, a car that is a few decades old will cost more to insurance than one that is a few years old, as it may lack the safety features and anti-theft features needed to keep rates low.
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How Gaps in Coverage Affect Auto Insurance Rates is a post from Pocket Your Dollars.
