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Why It’s Getting Harder for Older People to Get Life Insurance?

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life insurance for older people

The coronavirus pandemic has made waves in pretty much every industry. Life insurance, being an industry that thrives on interest built on their cash reserves, is no exception. Not only that, but there are obvious health risks that make it harder to get life insurance right now.

For older people, life insurance being hard to get is nothing new, but it is somehow getting even more difficult. There are many different factors that go into life insurance eligibility; to make sure you are properly educated to prepare for your future, let’s discuss life insurance for older people. Namely, why is it becoming even harder to get?

Health Risks

With the presence of a global pandemic, the risk for life insurance companies has shot up across the board. Compound this with COVID’s tendency to be extremely aggressive for older folks, and you have a big problem for the elderly. This makes it far more likely, as long as the pandemic persists, that life insurers will be paying out to the families of older policyholders.

Just like any other form of insurance, an increase in risk typically comes with an increase in price. As a result, it is more difficult to afford. Insurance companies also tend to be stricter when it comes to eligibility, and life insurers are notoriously thorough.

Interest Rates

With the current state of interest rates, and the federal reserve constantly shrinking them, income for life insurers is dwindling. One of the major income sources for these companies is the interest they are able to make on the money they hold. When you shrink a major income source, risk inherently grows. Their ability to recover from losses, as well as their ability to absorb them in the first place, are put in jeopardy.

This means that they will have to become stricter in order to stay afloat. Raised prices aren’t a surprise either, as they need to compensate for lost income in order to cover their current liabilities. Insurance companies are intricate beasts, and money can be lost at every turn. So, it makes sense that they are having to compensate heavily, at least for the time being.

Uncertainty

The biggest issue for insurance companies is not knowing what to expect. While risk is inherent, they are constantly looking for ways to minimize it. So, the issues aren’t just the massive global pandemic and the extremely low-interest rates; the issue lies in the fact that we don’t know when either will end. These companies have to be aggressive out of the gate because they don’t want to be left bankrupt because they were optimistic. These issues are temporary, but how temporary?

There are executives paid big money to figure that out, and you bet your bottom dollar that they are going to overcompensate. After all, when the company goes away, so do those big bucks. Being one of the guys in charge when something like that happens doesn’t bode well for future jobs, either — this is especially true in this job market.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. If you want to be able to customize your blog on your own domain and need hosting service, we recommend trying BlueHost. They offer powerful hosting services for $3.95/month!

How to Figure Our Earnings Before and After Taxes (EBIT)

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How to Figure Our Earnings Before and After Taxes (EBIT)

If you run a business, there is a slew of financial information that you need to track. One critical figure is your earnings before tax (EBT), a metric that can help you assess your company’s financial performance and its overall health. It’s also vital to be able to calculate your earnings after tax (EAT), ensuring you understand what you owe (or paid out in taxes) and what you’re bringing in otherwise. If you want to be able to figure out your earnings before and after taxes, here’s what you need to know.

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5. Mortgage Refinancing Points

Calculating Earnings Before Tax

In the simplest terms, EBT is a reflection of the company’s revenue minus expenses, not including taxes. It’s a standard line item on income statements, making it a crucial figure to calculate.

Typically, you start by determining your gross sales. That is the foundation of your company’s income, so it serves as the strongest starting point.

Next, you deduct your cost of goods sold (COGS). Next, you’ll subtract your general, administrative, and operating expenses. After that, factor in interest and depreciation.

For example, let’s say your company sold 50 widgets during May for a sales price of $500. Your gross sales would be $25,000. But producing those widgets cost $100 a widget, making your monthly COGS $5,000. That means your company’s gross revenue is $20,000 ($25,000 – $5,000).

Next, you could consider your overhead costs. For this example, between rent, wages, and other operating expenses, that figure comes in at $9,000. By subtracting that from the gross revenue, you get $11,000. That $11,000 is your earnings before interest, tax, depreciation, and amortization (EBITDA).

If you have no physical assets, that EBITDA is also your earnings before interest and tax (EBIT). But, if you have assets, then you’d have to calculate depreciation and subtract that from the $11,000. For simplicity, we’ll say that isn’t a factor.

For companies without assets, if you have interest-related expenses, you would need to subtract those. For instance, if your interest expenses were $1,500 a month, your EBT would be $9,500.

Calculating Earnings After Taxes

Part of why EBT is so important is that it represents your company’s taxable income. With that figure, you can calculate your EAT.

Precisely how you complete that calculation depends on your business’s tax bracket. In the U.S., the federal rate is 21 percent. If your monthly EBT was $9,000, that would make your annual EBT $108,000. If you subtract 21 percent from $108,000, you get $85,320 for your EAT.

Now, it’s important to note that there can be state taxes to contend with as well. Those will vary depending on your location and, potentially, by your taxable income level. Not all states use a flat-rate, so you’ll need to determine your bracket to complete the final calculation.

Why EBT and EAT Both Matter

Both EBT and EAT are crucial figures. Not only do they speak to the health of a company, but they make comparing the states of several businesses easier. Hence why they are a crucial part of income statements, especially in the eyes of potential investors and lenders.

For example, since each state can have different tax rates, EBT allows investors to examine a company’s performance against another’s fairly. One business isn’t being incidentally penalized for operating in a jurisdiction with higher taxes.

In contrast, EAT gives clear indications of a company’s profitability. It shows how much the organization has left after handling all of its obligations, including taxes.

Together EBT and EAT paint a holistic picture. As a result, they can be vital for the full assessment of a company’s current state.

Do you have any other tips that can help a person figure out their earnings before and after taxes? Share your thoughts in the comments below.

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Making Use of “Extra” Unemployment Money

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Unemployment

Due to the coronavirus epidemic, unemployment payments have seen a pretty hefty increase. The CARES act implemented an extra $600 per week for unemployment recipients, making the weekly payouts go up as high as $1,050. This is much more money than many of these unemployed workers were making while employed, and this calls for some discussion.

While many sites are talking about the moral implications, we aren’t here to drag you down with that. Rather, if you’re one of these lucky people, we are going to show you the best uses of your extra cash. With all of the stress surrounding you right now, it is time to figure out how we can better your life through it all.

Emergency Savings

First things first, the main takeaway from this epidemic has been the importance of liquid savings. Retirement funds are great, but if you don’t have liquid cash for emergencies, you could end up in some seriously sticky situations. So, start by making sure that you can get at least $1000 in savings.

If you are already there, or pretty close, you should try to load up the savings until you have enough to cover 3 months of rent and bills. This will ensure that you don’t have to fear for your livelihood if emergencies come up later on down the road when you are back at your normal pay. The peace of mind itself is worth the effort here.

Pay Off Debts

If you have a couple thousand on credit cards, it is time to take care of that. Got a car that is almost paid off? Let’s get that handled as well. If you are making more than you made at work, then dedicate all of that extra to paying off your debts. It may seem like a bit of a buzzkill, but getting these payments off your back will make your regular salary feel bigger. This is because it won’t be bogged down by monthly expenses related to your debts.

There is nothing like the freedom of finally being out of debt, and the extra money in your pocket each month is a sweet bonus. The cherry on top of it all is the interest you won’t have to pay on things such as credit cards. Do yourself a huge favor, and get the debtors off of your tail.

Buy a Cheap Car With Cash

If you don’t have a vehicle right now, then you may want to get one. As we have discussed before, all you need is a few grand to get yourself a great ride. There are vehicles that are reliable, comfortable, and even fast in the $2,000-5,000 range. This shouldn’t be too hard of a range to afford if you’re making almost $1,200 more each paycheck. Once you have done this, you will be one of the lucky few to get out of this with a new (to you) ride. Even luckier, you won’t even have a car payment! This one is really only if you need a car, or can get rid of your old one without losing money. For example, I sold my 2011 BMW 328i during this quarantine so I could ditch my payment. What I ended up with was a beautiful $4,000 1996 Corvette.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. If you want to be able to customize your blog on your own domain and need hosting service, we recommend trying BlueHost. They offer powerful hosting services for $3.95/month!

Here Are the Upcoming Changes for Student Loan Borrowers

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Student loan borrowers

There has been a lot of talk surrounding the United States student loan debt over the past few years. Given the additional financial struggles that came along with COVID-19, many lawmakers are looking for a way to help student loan borrowers manage their debt. Here is what that may look like in the months to come.

What Changes Are Coming?

Since the coronavirus outbreak, it has become increasingly clear that there is something fundamentally wrong with the way the U.S. finances higher education for students. Not to mention, 2020 college graduates are entering one of the worst job markets in recent history. The pandemic gave lawmakers a basis for introducing relief programs to the Senate floor.

They have already passed temporary assistance that will waive all interest on student loans until at least October 2020. However, many politicians think more is needed. House Democrats have proposed the zero-interest period should extend through October 2021.

Additionally, the new HEROES Act would give up to $10,000 in loan forgiveness to private borrowers who are struggling financially. Democratic presidential candidate Joe Biden has even gone as far as to say he would forgive student loan debt for any borrowers who attended public college.

The country’s leaders will be meeting to discuss possible changes for student loan borrowers in the coming months. For now, it is hard to say what will happen.

Student Loan Borrowers, Keep This In Mind

No matter what happens with student debt in America, student loan borrowers need to maintain payments up until a decision is made. Putting off payments until a decision is made in Washington regarding a relief program can seriously hurt your finances.

Don’t forget, there are also a number of payment arrangements you can make as well as forbearance options if you are having trouble paying. Call your loan provider to discuss your options if you need help.

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Here Are the 5 Best Personal Finance Forums

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personal finance forums

Personal finance forums can provide you with a wealth of information. Many of them have highly engaged communities filled with individuals who are happy to share their experiences and knowledge. Plus, many people are asking the same questions you have, and that lets you know that you aren’t alone. If you are wondering which ones are worth exploring, here are five of the best personal finance forums around.

5 Best Personal Finance Forums

1. myFICO Forums

In the myFICO Forums, you can find a slew of information about credit reports and scores, which is something you’d expect. But there’s also much more. There are forums focused on how money impacts relationships, news and events that alter the landscape, types of credit accounts, and much more.

Overall, the community at myFICO is incredibly active. Plus, there’s plenty of information already available. There’s a decent chance that someone has already asked the question you have on your mind, so you can just search through the forums to find the answers you need.

2. YNAB Forums

The support forum at You Need A Budget (YNAB) is a great place to learn more about personal finance. The community is incredibly helpful, focusing on working together to help each other navigate the complexities people often encounter.

Plus, if you’re looking for a place to vent about your money woes, the community is there to support you. They understand that challenges come with the territory, so they don’t begrudge the occasional gripe as long as the rest of your post tries to be constructive.

3. Reddit – Personal Finance

At r/personalfinance, nearly anything goes as long as it’s related to the topic. You’ll find everything from resource-oriented posts that help people gain access to critical information, organizations, or support to vents that let someone get an experience off their chest.

By and large, the community aims to be helpful. Plus, people from all walks of life take part, giving you access to a range of perspectives.

4. Mr. Money Mustache Forums

A massive community that happily discusses anything personal finance-related, the Mr. Money Mustache Forums are a great option. Their tax section is particularly beneficial, filled with information that can help you learn more about complex topics and make smarter choices.

5. Saving Advice Forums

If you’re looking for personal finance tips, want questions answered, or want to share your experiences with the masses, the Saving Advice Forums are a great place to do it. You’ll find tons of posts on popular topics, including credit cards, mortgages, home buying, and windfalls. Plus, the community is incredibly active and supportive, making it a great choice for asking about nearly anything.

A Note About Using Personal Finance Forums

Before you hop onto any forum and start taking part in the discussions, spend some time reading the rules. Every site has codes of conduct, requirements, and banned activities, all of which you should learn about before actively participating. That way, when you do start to post, you’re going about it properly, allowing you to become an asset to the community and not a source of frustration. Plus, you won’t accidentally get yourself banned, ensuring you get to remain part of the forum long-term.

 

Do you use any of the forums above? Are there other personal finance forums that you’ve found to be valuable? Share your thoughts in the comments below.

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Save Up or Reduce Principle During Zero Interest Period

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zero interest period

COVID-19 has led to some very unique measures on the part of the US government. With $1,200 stimulus checks and increased unemployment benefits, it is no wonder that student loans got worked on. The current measures regarding student debt include a zero-interest period. So, there are a couple things this could mean for you. As a result of these measures, one could actually suspend loan payments completely for the duration of this benefit. This will help you save up an emergency fund for times like these. On the other hand, you could take the opportunity to pay straight out of the principle of the loan, decreasing the interest you’ll be charged afterward. Both seem to be pretty smart choices, so we will dive into a video to discuss what is best.

In Summary

It largely depends on your situation. as with most financial decisions, your current debts and assets will change the answer. If you have a lot of other high-interest debt, it will probably pay off to get rid of some. Not only that, but if you have no savings, now is a great example of a time where they would have come in handy. SO, if either apply to you, you should probably suspend and save. If you are otherwise debt-free and have decent savings, you may benefit from reducing the principle on your loan. Doing this could save you a decent chunk of change in the long run on interest, and could help you prepare better for the future.

I hope this video helped you make your decision. The primary focus right now should be your financial security, so don’t worry as much about gains in a time like this. While many people may be able to score big in stocks right now, you can still count yourself lucky if you only come out of this with what you had before. Not very many people will be able to say the same.