Why shouldn’t we be able to have a broad based emergency accounts that hold cash value and are non-taxable?
How much insurance do you have to pay and why couldn’t you have a broad based emergency account that you can regulate yourself and that is not taxed and that you can use when you need to? Home ins., Car ins., health ins. isn’t it just a drain on personal resources and considering these insurance companies do not necessarily have to cover anything if something happening shouldn’t you have a choice not to keep insurace that does not hold a cash value. If you figure $800 a month for health insurace, $126 for car ins.,$620 home ins., that means each year you would have $11,732 in your pocket if you did not have to pay these things and that is at the low end. Not only that if you could draw intrest on that and that should not be taxed since it is an emergency account then in ten years you should easily have over $117,320 in the bank. So what are your thoughts on this?
The expensive society builds expensive way of living.
If you use loans, you are in need of larger insurances.
If you want to be smarter then the system you’re living in-you need a good financial advisor and
CASH!
Because all of the above: I have debits and overdrafts as permanent conditions.
But keep trying to be in a good balance.
First of all, if you are paying $800 a month for health insurance and $600 a month for home insurance, you need to look at another company – that’s WAY too much (unless you have a large famly and a very expensive home). ($126 for auto is reasonable).
Second, self-insuring is an option you just have to have the money to do it. If you have a mortgage against your home, your lender is going to want you to have an amount set aside equal to the amount of your loan. CA DMV will let you purchase a bond instead of carrying liability insurance, but a lender is going to want you to have enough liquid cash to at least be able to pay off your loan. Neither of these lenders are going to give you 10 years to save up the money. Also, suppose you started your little savings account today and your house burned to the ground tomorrow – what are you going to use to rebuild or pay off your mortgage?
You do have a choice not to keep the insurance.
Nobody forces you to have health insurance, plus you have options. You can get a high deductible HSA qualified plan for half the premium and open an HSA account, which does have tax advantages, to cover the deductible and little doctor visits. Then when you have a $100,000 hospital bill you pay the deductible out of the the HSA account and the insurance pays the rest.
You do not have to have auto insurance. It is a law that you must be financially responsible. States will allow you to post a bond with them to cover you. In my state you need $40,000. However, that doesn’t do much if you are responsible for an accident which permanently paralyzes someone. 30% of your wages can be garnished to pay their expenses.
There is no law that says you must have homeowners insurance. The mortgage company requires it, though, to protect their loans. If the house is paid off you do not need to carry the insurance. However, you’d need enough in savings to rebuild should it burn or to pay off someone who gets hurt on your property.
OK, but one average car accident is going to cost you $30,000 for damage to both cars, IF there aren’t any major injuries. One C-Section birth is going to cost you $20,000, IF the baby doesn’t have any issues – and could cost $75,000 or more if the baby has issues.
You, personally can’t SAVE enough money to cover your own potential expenses. Especially if you’re living paycheck to paycheck, as you just indicated in your prior question.
In the US today, the average per capita spending on HEALTH COSTS (not insurance, but medical care) is $7,000 a year. Using your numbers, if you’re AVERAGE, you’re behind the 8 ball and can’t pay. YOUR method only works for people who are way, way, way healthier than average – maybe 5% of the population? 10%?
Think of it this way. Really wealthy people use financial tools. They NEVER self insure for things like house fires, auto accidents, or health problems. They are VERY good money managers. They KNOW that it’s cheaper, in the long run, to pay for insurance, and not put in a claim, than to have ONE uncovered claim.