Protect Your Home Regardless of any Turn in Health

Your income is the foundation of your financial strategies and your capacity to earn income into the future is one of your largest assets. How would the loss of your paycheck - or one paycheck in the family - due to injury or illness affect your lifestyle?

Did you know that the #1 reason for home foreclosure is disability? Disability is the reason for home foreclosure 16x more than death according to the U.S. Home and Housing Finance Agency.

Did you know that 1 in 4 Bankruptcies are due to disability according to Norton's Bankruptcy Advisor?

Did you know that disability due to illness accounts for more than 86% as compared to physical injuries at 14%?

During a meeting with a Financial Planner, I learned some important details about Disability Insurance of which I was completely unaware:

- The typical Disability Insurance provided by employers covers 60% - 66% of base salary - excluding bonus and commissions.

- Employer-paid Disability Insurance is taxable, therefore, even if you are paid entirely by salary covered by disability insurance, you will face a 30%-44% reduction in net income.

The final item that I learned is the significant difference between an "own-occupation" and "any occupation" policy. In general:

- An "own occupation" policy pays disability income if you cannot return to your own occupation.

- An "any occupation" policy pays disability income only if you cannot return to any occupation.

We insure what we cannot afford to lose: health and home, cars and personal property, but we rarely consider insuring our most important personal asset - our ability to generate income.

If the loss of income would put your home ownership at risk, it could be important to consider the cost of disability insurance when planning a home purchase.

Enhance Your Financial Future When Selling Your Home

In the high cost housing market of Contra Costa county, California, it is critically important to make educated financial decisions when selling your current home and purchasing a new home. The proceeds from the sale of your home are often your single largest transfer of assets and represent an opportunity to transform your financial future.

The national average home price is $208,700 and, at that, more than 80% of Americans are significantly under-funded for retirement. With the median home price of $698,000 in Walnut Creek (as of 10/07), retirement funding is even more dismal - a fact that can easily be corrected.

For example, assume that you will be $500k short for a comfortable retirement in 20 years and your account earns an average of 8%. There are two methods to close the gap:

- an additional monthly deposit of $848.87

- Increase the mortgage on your new home and make single immediate deposit from your net proceeds of $107,280. The cost of this option (using a 20 year fixed rate at 6.50%) is $799.85, BUT REMEMBER, mortgage interest is tax deductible providing additional income tax savings of $160 per month (using a 20% effective tax rate). The net cost for this option is $639.85 per month versus $848.87 per month – a savings of $209 per month or an additional $49,920 over 20 years.

Follow these steps to enhance your financial future when selling your current home and buying a new home:

Get a “Net Sheet” from the realtor who will be listing your home for sale. The Net Sheet should list all the costs associated with the sale and show the net funds you will receive when the sale closes.

Consult with your Financial Planner or Certified Mortgage Planner and CPA to determine any gaps in your financial and tax planning.

Allow sufficient time to review mortgage options that balance your downpayment, income tax deductions, monthly cash-flow and financial goals before you are caught up in the emotional excitement of buying a new home.

Make More Money With the Money You Make!

When choosing a savings account, you need to determine if you need "bricks" (a local bank building) or are comfortable with "clicks" (internet banking). The trade-off between Bricks and Clicks is the return on your account. It makes sense that if a bank is paying for Bricks, there are fewer funds available to pay the interest on your savings account.

The current top contenders for "Click" online savings are ING Orange savings account at 4.20% APY and Countrywide Bank Savings Link at 4.00% APY or 5.30% if you deposit more than $10k. (Savings Rates are per the company websites as of the date of this post).

The great thing about both accounts is that you can attach them to your personal checking account - even if it is at a different institution - and transfer funds between them with the click of your mouse.