Comments on: Give Yourself a Financial Checkup

By: Debt Consolidation Regina

Debt Consolidation Regina — Fri, 26 Jun 2009 20:25:52 +0000

This is a great list and I agree that having an emergency fund should be the main priority. It is vital to have some sort of back-up fund to help you in times of need or during an unexpected event.

By: Tim Landry

Tim Landry — Fri, 03 Oct 2008 15:00:40 +0000

I would DEFINITELY put disability insurance in front of even term life insurance for at least two reasons. Your chances of being disabled at a young age are FAR GREATER than dying – remember the old truth. 3% of mortgage foreclosures are due to death and 48% are due to disability – 16 to 1 says STRONGLY – buy DI first. Secondly if a person dies it may be devastating emotionally but the financial impact while severe comes nowhere close to that of a disability.

PS – what you are really referring to is what the industry calls “regular occupation”. “Own Occupation” is designed for highly specialized occupations

By: Mario Sanchez

Mario Sanchez — Sun, 21 Sep 2008 02:59:52 +0000

Great checklist. This is a wake up call for people who spend more time researching a flat screen TV than getting a grip on things like these, that have a real impact in our life and future.

By: Cannon_fodder

Cannon_fodder — Wed, 10 Sep 2008 08:42:46 +0000

DGI,

“I also don’t buy into the whole insurance thing myself,”

I took that to mean you were talking about whole life insurance. Are you saying that you don’t buy into any type of insurance, or just life insurance, except for instances where you make disparately more than your spouse?

By: MultifolDream$

MultifolDream$ — Wed, 10 Sep 2008 00:59:18 +0000

LL, I would add that once you establish positive cash flow, try to set some money for emergency fund, before attacking debt as you do not want to face another financial difficulty sink back in the debt.
The investming should come after you win your fight with your bad debt as it is unlikely that you will be able to have higher ROI than the interest you are paying with aftertax dollars.

By: FrugalTrader

FrugalTrader — Tue, 09 Sep 2008 16:29:43 +0000

Hi LL, great question. The priority depends on your situation. If you have children, then getting a will and life insurance may be top priority. For for generic priority, I would establish positive cash flow first ie. spending less than you earn, pay down debt, then invest.

By: LL

LL — Tue, 09 Sep 2008 16:12:30 +0000

FT – How would you prioritize these items? In particular… would you pay down the “bad” debt before creating an emergency fund? And what about adding to investments – where does that fit in priorities over paying down debt?

By: Dividend Growth Investor

Dividend Growth Investor — Tue, 09 Sep 2008 15:56:57 +0000

Lawyer, why are you disagreeing with me. I said “I also don’t buy into the whole insurance thing myself,”

and then added

” but could see it as a good idea if you are the sole breadwinner in the family or if you make more money than your spouse. ”

Other than that my point is still “that life insurance is good.. for insurance companies shareholders.”

By: FrugalTrader

FrugalTrader — Tue, 09 Sep 2008 11:02:49 +0000

Chuck, CIBC has a free program that is offered with their credit products that notifies you every time that your credit is “pinged”.

RJ, i’m with you. Insurance is not about winning the lottery, it’s about protecting dependants.

By: RJ

RJ — Tue, 09 Sep 2008 05:58:21 +0000

I don’t think Mr.Archanfel really understands insurance……if you depend on ur investments for insurance needs your financial plan has a SERIOUS flaw
1. you don’t know when it will happen, how much you’ll need. Yes it could b during bad times, but also potential tax liabilities.
2. Your investment plan is for a specific purpose (MDJ to become a millionaire before 35) if you use it as insurance you will destroy the whole plan and may never reach your goal.
3. Insurance is TAX FREE MONEY……

No matter how big your investment portfolios you will always have a need for insurance. Sometimes people don’t understand it fully, it is used as a MAJOR tax relief by wealthy people.

The two largest policies are owned by the two richest men in the world Bill Gates and Warrent Buffet. They are worth over $60 Billion each I am sure they have enough money to consider themselves self-insured but they understand insurance.

By: Sam of Fix My Personal Finance

Sam of Fix My Personal Finance — Tue, 09 Sep 2008 03:01:44 +0000

Good list!

For me my top priority is first achieving my emergency fund. Once I’m done with it, then I can start with the other items.

Having an emergency fund will protect you from unpredictable events in your life. Plus the piece of mind having known that you have such fund is ideal.

By: MultifolDream$

MultifolDream$ — Tue, 09 Sep 2008 02:36:45 +0000

Chuck, I did it this year, and it was pretty short and boring reading.
I was also disappointing to see that there was no credit rating – wrong expectations I guess for a free report.

By: Chuck

Chuck — Tue, 09 Sep 2008 02:16:47 +0000

@multifoldreams
- checking your own credit is also considered a hit on your credit bureau score. So 1x per year should suffice. I don’t know if its available in Canada, but one of my friends in the US pays a fee to know be informed via email whenever someone is checking his credit score. He used to be a victim of credit fraud and found it gave him peace of mind.

@MGL
totally agree with you. In my dad’s case his father passed away without insurance leaving my father the head of household at the age of 14. A lot of his life was put on hold helping provide for and raise his younger siblings. I sometimes get a feeling he dislikes the youngest for that reason.

By: MultifolDream$

MultifolDream$ — Tue, 09 Sep 2008 01:23:19 +0000

DAvid, I’ve tried few times with budget but it never works … On the other hand Expense monitoring and Net Worth check every month is something you can do for sure and works great mixed with Automatic investment programs.

MDJ, When you say “Get your credit report and check your credit score regularly.” what exactly is regularly? Most experts advise once a year …

By: MoneyGrubbingLawyer

MoneyGrubbingLawyer — Mon, 08 Sep 2008 17:32:18 +0000

I’ll disagree with Mr.Archanfel and DGI on the insurance part- I definitely get it for family breadwinners.

The purpose of term life isn’t to provide a windfall, it’s to ensure that those left behind can continue to enjoy a similar standard of living. Most families live a lifestyle based on certain income expectations, and the sudden loss of a breadwinner could mean that their lifestyle would no longer be sustainable. While investments can be liquidated, this means that they can no longer be used for their original purpose, whether that is retirement, education, financial independence, etc.

The same can be said for disability insurance- would you really want to find yourself disabled for a period and have to deplete your retirement savings to pay for daily living expenses, and then have to try to rebuild your funds if/when you return to work?

Term life and disability are generally inexpensive and I find the premiums well worth the piece of mind they provide.

By: The Rat

The Rat — Mon, 08 Sep 2008 16:37:13 +0000

Regarding the credit score ( I also read the link to Tips on improving it), I definitely agree that there are some obvious pitfalls out there to avoid, as well as ensuring the information on your credit check is accurate (such as employer infomation, etc). However, I have personally come to realize that there are a lot of complex and not entirely transparent factors that play a role in one’s credit score, or, more importantly – being granted additional credit. My thoughts only. I just think that credit lending institutions have their own formulas they use and review individuals on a case-by-case basis quite often.

By: DAvid

DAvid — Mon, 08 Sep 2008 15:15:23 +0000

Re: Cash Flow

There are a number of Personal Budget Templates on the ‘net which have income & expenses categorized. I found this helpful to capture more of my expenses, especially those annual ones, that I might forget about!

DAvid

By: Dividend Growth Investor

Dividend Growth Investor — Mon, 08 Sep 2008 14:54:56 +0000

I also don’t buy into the whole insurance thing myself, but could see it as a good idea if you are the sole breadwinner in the family or if you make more money than your spouse. Other than that life insurance is good.. for insurance companies shareholders.

By: FrugalTrader

FrugalTrader — Mon, 08 Sep 2008 14:01:21 +0000

Mr. Archanfel, with regards to insurance, the money covers what your dependents would require to financially survive. If you have enough in your portfolio, then great, you are self insured. But if you’re like most North Americans out there, then not getting life/income insurance is a large financial risk IMO.

By: Mr.Archanfel

Mr.Archanfel — Mon, 08 Sep 2008 13:02:05 +0000

I don’t get the part about insurances. I have already thought insurance the same as buying lotto tickets. Both seek a vast amount of money through a tiny chance. Both has a negative return rate. Mathematically, they are exactly the same. If something does happen, some investment can always be liquidated. Sure, a bear market would mean maybe 20% losses on the withdraw amount, but wouldn’t that still be cheaper than buying insurance?

I am also not sure about buying “when the market corrects”. The problem is one never knows which phase the market is in. Nasdaq still haven’t recovered from the last crash. I think for average long term investors, the easiest thing is still to stick to your plan through dollar average. I mean I am sure technical analysis works, but 90% of people probably do not have the skill to do it.