Imagine you are a twenty-something post-grad that has just moved to the big city. You just got your first "real" job, and you are on the hunt for an apartment. You find a place you love, but the landlord ends the conversation asking if you have a renters insurance policy in place. A what?! Why would you possibly need renters insurance? Doesn't the landlord have everything covered in their homeowner's policy?
Renters insurance is a type of property insurance that can cover the loss of your personal belongings, liabilities, and living expenses. We'll break down what renters insurance does and doesn't cover to help you determine whether or not you, the tenant, will need it.
Unbeknownst to many renters, your personal property is not covered by your landlord's homeowner policy. This means that if you lose all of your possessions in a house fire, you will not be paid out by your landlord's insurance company.
Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage. In fact, most policies will cover your items even when they aren't on the property premises. Was you laptop stolen on vacation? You are covered under your renters insurance!
There are two options when choosing personal property coverage through renters insurance: replacement cost and actual cash value policies.
Replacement cost policies will cost more out of pocket, but they provide a large enough payout to replace the damaged or lost items at full retail price. Remember that laptop that was stolen on vacation? Even though it was three years old, you get the brand spanking new replacement.
Actual cash value policies will save you a bit on your premiums price; however, they will only pay out based on the value at the time the policy is taken out, minus depreciation value. With this type of policy, your stolen laptop probably will only get you a payout of about a quarter of what you purchased it for. You can use this handy depreciation calculator yourself to estimate the actual cash value of your personal belongings.
Liability insurance also comes standard with renters insurance policies. It protects you from any potential lawsuits from bodily injury and property damage that occurs on the premises. If you accidentally start a kitchen fire while cooking dinner, or your best friend's girlfriend slips and falls down your wet stairs due to the melting snow that was tracked in, then your renter's liability insurance can cover you if you are sued for medical payments or for the property damage. It can even cover your legal defense fees.
Additional living expense coverage also comes standard in renters insurance policies. It provides financial coverage when you have to temporarily live elsewhere in the case of damage to the property at which you reside. Some examples of what costs are covered are the following:
- Hotel bills, or temporary rentals
- Costs of eating out due to loss of kitchen
- Laundry bills
- Furniture rentals
- Storage costs
- Pet boarding
The amount the insurance company will pay out on expenses for this coverage depends on the difference between what you would typically pay for these costs versus what you would pay during the displacement.
Now that you understand the basics of renters insurance and what it covers, do you think it's worth it? You might still be up in the air, especially because renters insurance is probably super expensive, right? Wrong!
A survey conducted by Nationwide found that 75 percent of those without renters insurance don't realize they can get monthly coverage for as little as the cost of a pair of movie tickets.
The average cost of renters insurance in 2017 was $180 a year, or $15 a month.
Many insurance companies offer discounts if you bundle other insurance policies, such as your car insurance with your renters insurance. Also, things like security systems, deadbolts, and smoke detectors can often give you a discount on the price tag.
Still not sure if you need renters insurance? I suggest doing the following:
- Create a home inventory list of all of your belongings. There are tons of apps that make this part easy, such as Home Contents.
- Write down the value of each item you want to be replaced if your apartment was to, let's say, burn down. If you don't know what you bought it for, look up the value online.
- Include receipts and appraisals when you can, especially for any high priced items.
- Save pictures of all the items (the app will help with this, too).
Creating this home inventory list will be important and make your life a heck of a lot easier if you do get renters insurance. But more importantly, it can give you an estimate of the price of your personal belongings.
So maybe you don't think you need renters insurance if you do not have a high value on your belongings. But I bet you might be surprised at how much money is invested in those items!
In short, renters insurance is most likely worth it. Although it's not a necessity, the value of being covered for potential personal property loss, accidental liabilities, and financial coverage in the event of a catastrophe is well worth the low annual premiums. And it may someday save you thousands of dollars. If you are a current renter, do yourself a favor and get some insurance quotes today!
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While it's possible to be frugal with many aspects of your lifestyle, there are certain events and possessions that will require you to spend a substantial amount of money. Thus, a wise course of action is to begin saving well ahead of time while thinking about your goals for the future. This way, you'll be able to maintain a stable financial state even when faced with those large expenses. The following are a few major life purchases that you should plan for.
Marriage is a joyous occasion that many people look forward to. However, a wedding can be quite expensive, often costing thousands of dollars. Your family and your future spouse's family will often contribute to covering this, but you should still prepare to spend a good deal of your own money on the ceremony. If you're in a serious relationship and are considering marriage, you should plan where the funds for the wedding will come from and take the necessary actions to accumulate them. It's also crucial to discuss financial matters with your partner, since your property will merge once you get married.
A New Car
Automobiles remain one of the top modes of transportation. As a result, you may want to purchase a new car at some point in your life. Although you may be fine with an old or used vehicle at present, you may one day be motivated by a desire to acquire something nice for yourself or by the practical needs that arise as you raise children. Whatever the case, obtaining a new car is a major life purchase that you should plan for.
In addition to setting aside funds to eventually put towards a vehicle, you should also aim to build you credit score. This is because your credit score will determine your available car loan options. The higher your credit score, the more you may be able to lower your interest rates on your car.
Owning your own residential property is a worthy objective that you may hope to make a reality one day. Ideally, you should save about 20 percent of the total cost of a house before you buy it. This will allow you to make a larger down payment and thereafter face less interest on your mortgage.
As with acquiring a car, the mortgage options that you'll have can change based on how strong your credit score is. You'll want to increase your score as much as possible in the years leading up to buying a house so that you can get more favorable interest rates. In addition to contemplating down payments and mortgages, you must also remember that you'll need to deal with property taxes, insurance, maintenance and repair fees, and sometimes homeowners' association charges.
It's also necessary to hire a real estate agent to help you with the buying process. There are different types of real estate professionals. You should know how to distinguish between buyer's agents and seller's agents so that you can obtain favorable prices on homes as well.
Many people live together before getting married and have begun the process of combining accounts and sharing responsibilities. However, some people wait to do this only after marriage, and others wait until they're married to live together. Whichever path you've chosen, it's still crucial to know a few tips to manage money together as newlyweds to determine where you should begin and how you can remain on the same page.
Discussing Money Motivations
As we begin to share money with our significant other, we soon find out what one person may rank as a priority regarding money and the other may not. As such, sitting down and discussing money motivations is important. Two people who cannot agree on how to handle money may cause serious issues. This should include:
- How to deal with money following payday. Is a percentage put into savings? Is that the day to splurge on dinner, drinks, and more?
- The frequency and size of payments made to debts. Some people like to pay minimums, whereas others pay in full or make double payments.
- What do you each consider money well spent? Is it a new 70" 4K television? Is it an investment? Is it paying as much debt off as possible?
- How do you go about consulting each other before making purchases over a certain amount?
Establishing Financial Goals
After you evaluate the motivations behind your money and how it should be spent, you'll need to spend time together hashing out financial goals. As newlyweds, there are certain things on your list that you're going to want to save for. How do you go about that? How much of each paycheck will you dedicate to a particular fund?
Some things in the future worth making a financial plan for include savings and paying down debts. This is the time to be honest about your current financial standing. If you're looking to buy a home, you'll want to assemble a first-time homeowner financial checklist to begin to develop topics of conversation. Some of the things to consider setting goals for are:
- Student loans
- Car loans
- Future children
- A house
- Medical bills
- Delinquencies on credit reports
- Vacation and rainy-day funds
- Emergency funds
The more honest and open you can be with each other about the money you have and now the debts you share, the better. Implementing plans for the best ways to have the things that you both desire while still taking care of existing demands is important. These can be uncomfortable things to talk about; however, these conversations are necessary.
Following these tips to manage money together as newlyweds will allow you to have a starting point for conversations that can be tough to start. The sooner you and your partner get on the same page with finances and the responsibilities that come with them, the easier the transition will be and the sooner you'll find success.
It's the dream: money you can count on to keep rolling in, even while you sleep.
Passive income isn't entirely passive, of course. You'll put in work up-front to get the profits rolling, so don't relax in your recliner just yet. But with so many potential sources of passive income available to you, picking one or several will mean that the day you can finally kick back will draw steadily closer.
Real estate is a tried-and-true wealth builder for a simple reason: people will always need somewhere to live. Research the market in a growing community until you know a good deal when you see it. You can maximize rent by fixing up a deteriorating property or upgrading a mediocre one. The key is to hire a property manager to do all the day-to-day landlord duties for you—and you'll need a good one. Smart investors put their profits in another property and repeat the process until they have a diverse portfolio.
A YouTube Channel
You can start a blog if you're more comfortable hiding behind a computer, but consumers are more likely to prefer video content. Post a series of “how-to" videos to answer questions about whatever you're an expert in.
You can put up any content you want, but if you don't want to commit to regularly updating it, focus on “evergreen" topics that will draw clicks for eternity. Ads will create your income, especially if your channel grows in popularity. Better yet, sign up for affiliate marketing. If you recommend a product and provide a link to buy it, you'll get a small percentage of those transactions.
If you don't mind vinyl-wrapping your car with an ad for a company, you can get cash just driving around and running your errands. Make sure you contact a reputable company that doesn't ask for any money from you; if they're the real deal, they'll evaluate your car, your driving habits, your area, and more. Bonus: the brighter the ad, the easier it'll be to find your vehicle in the parking lot.
What's something that people will pay for but doesn't require shipping on your part? Finding that item is what can supplement your income indefinitely. Write an e-book, charge for your cross-stitching patterns, design prints that people can digitally download, invent an app, record a “masterclass," or whatever else you want. Every time someone new discovers it, the cash register rings. With a little more effort, this is a potential source of passive income for you that can continue to grow. Once you build up a customer base, they might want more products. The good part is that it's up to you whether you wish to give it to them.