The Difference Between Needs and Wants in Budgeting

Written by Martin Hamilton in Budgeting,Newsletter Last Updated October 7, 2023

Understanding the difference between needs and wants is crucial to managing your finances effectively. Your needs are the essential things that you require to survive, such as food, shelter, and clothing. Wants, on the other hand, are things that you desire, but are not necessary for your survival.

When it comes to budgeting, it is important to prioritize your needs over your wants. This means allocating your funds towards your essential expenses first, before spending on discretionary items. By doing so, you can ensure that you have enough money to cover your basic needs, while also saving for the future and enjoying some of the things you want.

Key Takeaways

Understanding the difference between needs and wants is crucial to effective budgeting.
Prioritizing your needs over your wants is important when budgeting.
Allocating your funds towards your essential expenses first can help you save for the future and enjoy some of the things you want.

Understanding Needs and Wants

When it comes to budgeting, it’s important to understand the difference between your needs and wants. Needs are things that are essential for your survival or well-being, while wants are things that you desire but are not necessary for your survival or well-being.

To help you differentiate between your needs and wants, it can be helpful to create a list of each. Your needs list should include things like:

Housing
Food
Utilities (electricity, water, gas)
Transportation (car, public transportation)
Insurance (health, auto, home)
Basic clothing and personal hygiene items

These are things that you absolutely need in order to live and function in society. Your wants list, on the other hand, might include things like:

Eating out at restaurants
Entertainment (movies, concerts, sporting events)
Travel
Designer clothing and accessories
Luxury items (expensive jewelry, high-end electronics)

While these things may bring you pleasure and enjoyment, they are not essential for your survival or well-being. By understanding the difference between your needs and wants, you can prioritize your spending and make sure that your essential needs are met before you indulge in your wants.

Keep in mind that your needs and wants may differ from someone else’s, depending on your individual circumstances and lifestyle. It’s important to create a budget that works for you and aligns with your personal values and priorities.

The Role of Needs in Budgeting

When creating a budget, it’s important to distinguish between your needs and wants. Needs are essential for your survival and well-being, while wants are things that you desire but are not necessary. In this section, we will focus on the role of needs in budgeting.

Your needs should be your top priority when creating a budget. They are the expenses that you must pay to maintain your basic standard of living. Examples of needs include:

Housing (rent/mortgage)
Utilities (electricity, gas, water)
Food
Transportation (car payments, gas, public transportation)
Healthcare (insurance, medications, doctor visits)

When you create your budget, make sure to allocate enough money to cover your needs first. This will ensure that you have enough money to pay for the things that are essential to your survival and well-being.

It’s also important to prioritize your needs. For example, housing and food should be at the top of your list, followed by utilities, transportation, and healthcare. This will help you make sure that you have enough money to cover your most important needs.

Finally, it’s important to be realistic when budgeting for your needs. Make sure to account for unexpected expenses, such as medical emergencies or car repairs. This will help you avoid financial stress and ensure that you have enough money to cover your needs even in difficult times.

In summary, your needs should be your top priority when creating a budget. Make sure to allocate enough money to cover your essential expenses, prioritize your needs, and be realistic when budgeting for unexpected expenses.

The Role of Wants in Budgeting

When it comes to budgeting, it is important to understand the difference between wants and needs. While needs are essential for survival and should be prioritized in your budget, wants are things that you desire but can live without. However, that does not mean that wants should be completely ignored in your budgeting process.

In fact, acknowledging wants in your budget can help you stay motivated and on track with your financial goals. By allowing yourself to budget for some wants, you can avoid feeling deprived and discouraged, which can lead to overspending and budgeting burnout.

One way to prioritize your wants is to allocate a specific percentage of your income towards discretionary spending. This can include things like dining out, entertainment, and hobbies. By setting a limit on your discretionary spending, you can still enjoy the things you want without compromising your financial stability.

It is important to note that wants should not take priority over your needs in your budget. If you find that you are consistently overspending on wants and struggling to cover your basic expenses, it may be time to reevaluate your budget and adjust your spending habits accordingly.

In summary, acknowledging your wants in your budget can help you stay motivated and avoid overspending. However, it is important to prioritize your needs and allocate a specific percentage of your income towards discretionary spending to maintain financial stability.

The Impact of Needs and Wants on Personal Finance

Understanding the difference between needs and wants is essential in managing your personal finances. Needs are essential items that you must have to survive, such as food, shelter, clothing, and healthcare. Wants, on the other hand, are non-essential items that you desire but can live without, such as entertainment, vacations, and luxury items.

Identifying your needs and wants is crucial in creating a budget that works for you. By prioritizing your needs over your wants, you can ensure that you have enough money to cover your essential expenses. This can help you avoid overspending and accumulating debt.

When you prioritize your wants over your needs, you may find yourself struggling to pay for essential items. This can lead to financial stress and difficulty in meeting your financial obligations. It is important to remember that wants can wait, but needs cannot.

By understanding the impact of needs and wants on your personal finances, you can make informed decisions about how to allocate your money. Creating a budget that prioritizes your needs and allows for some discretionary spending on wants can help you achieve financial stability and security.

Strategies to Balance Needs and Wants in Budgeting

When it comes to budgeting, balancing your needs and wants can be a challenge. Here are some strategies to help you balance the two:

Prioritize your needs first. Before allocating any money towards your wants, make sure you have covered all of your essential needs, such as housing, food, utilities, and transportation. This will ensure that you are not sacrificing your basic needs for unnecessary wants.
Create a budget. A budget is a great tool to help you manage your money and prioritize your spending. It allows you to see where your money is going and helps you make informed decisions about your spending.
Set realistic goals. Setting realistic goals for both your needs and wants can help you stay on track and avoid overspending. Be honest with yourself about what you can afford and what you truly need versus what you want.
Use cash instead of credit. Using cash instead of credit can help you avoid overspending and keep you accountable for your spending. It’s easy to overspend when using credit, so try to limit your credit card usage and stick to cash whenever possible.
Be flexible. Life is unpredictable, and unexpected expenses can arise at any time. Be prepared to adjust your budget and prioritize your spending accordingly.

By implementing these strategies, you can balance your needs and wants in your budget and achieve financial stability.

Common Mistakes in Distinguishing Needs and Wants

When it comes to budgeting, identifying the difference between needs and wants is crucial. However, it’s not always easy to distinguish between the two, and many people make common mistakes that can lead to overspending. Here are some of the most common mistakes people make when distinguishing between needs and wants:

Mistake #1: Confusing Wants for Needs

One of the most common mistakes people make is confusing wants for needs. For example, you may think that a new pair of shoes is a need because your old ones are worn out, but in reality, it’s a want. Needs are things that are essential for survival, such as food, shelter, and clothing. Wants, on the other hand, are things that are nice to have but not necessary.

Mistake #2: Failing to Prioritize

Another mistake people make is failing to prioritize their needs and wants. For example, you may think that going out to eat is a need because you’re hungry, but in reality, it’s a want. When you fail to prioritize your needs and wants, you may end up overspending on things that aren’t essential.

Mistake #3: Impulse Buying

Impulse buying is another common mistake people make when distinguishing between needs and wants. You may see something you want and buy it without thinking about whether you really need it. Impulse buying can quickly lead to overspending and can make it difficult to stick to your budget.

Mistake #4: Not Considering the Long-Term Costs

Finally, many people make the mistake of not considering the long-term costs of their purchases. For example, you may think that buying a new car is a need because your old one is unreliable, but in reality, it’s a want. When you don’t consider the long-term costs of your purchases, you may end up overspending and putting yourself in a difficult financial situation.

In conclusion, distinguishing between needs and wants is essential for effective budgeting. By avoiding these common mistakes, you can better manage your finances and make more informed purchasing decisions.

Practical Tips for Prioritizing Needs and Wants

When it comes to budgeting, it’s important to prioritize your needs over your wants. Here are a few practical tips to help you do just that:

1. Create a Needs vs. Wants List

Start by creating a list of all your needs and wants. This will help you to see what is essential and what is not. Once you have your list, prioritize your needs at the top and your wants at the bottom.

2. Analyze Your Spending Habits

Take a look at your spending habits and pinpoint areas where you tend to overspend on wants rather than needs. This will help you to identify areas where you can cut back and redirect that money to your needs.

3. Set Realistic Goals

Set realistic goals for yourself when it comes to budgeting. Don’t try to cut out all your wants at once, as this can be overwhelming and lead to failure. Instead, start small and gradually work your way up to bigger changes.

4. Use Cash Envelopes

Consider using cash envelopes to help you stick to your budget. This involves taking out the cash you need for your needs and wants each week and putting it into separate envelopes. Once the money in each envelope is gone, you can’t spend any more until the next week.

5. Be Mindful of Sales and Discounts

While sales and discounts can be tempting, it’s important to be mindful of them and only take advantage of them when they align with your needs. Don’t let a sale or discount convince you to buy something you don’t really need or can’t afford.

By following these practical tips, you can prioritize your needs over your wants and achieve your budgeting goals.

The Psychological Aspect of Needs and Wants

When it comes to budgeting, understanding the difference between needs and wants is crucial. However, it’s not just a matter of identifying what you need versus what you want. There’s also a psychological aspect to consider.

Firstly, it’s important to recognize that needs and wants are not always clear-cut. What you consider a need may not be the same as what someone else considers a need. Similarly, what you consider a want may be seen as a need by someone else. This can create confusion and make it difficult to prioritize your spending.

Another psychological factor to consider is the role that emotions play in our spending habits. Many of our wants are driven by emotions such as desire, envy, or even fear of missing out (FOMO). We may feel like we need the latest gadget or fashion item because everyone else has it, or we may want to keep up with our peers.

On the other hand, needs are often more practical and less emotionally driven. They are things that are necessary for survival and well-being, such as food, shelter, and healthcare. However, even needs can be influenced by emotions. For example, you may feel like you need a bigger house or a nicer car because you want to impress others or feel more secure.

Understanding the psychological aspect of needs and wants can help you make more informed decisions when it comes to budgeting. By recognizing the emotions that drive your spending habits, you can start to prioritize your needs over your wants and make more rational choices.

Conclusion

In conclusion, understanding the difference between needs and wants is crucial to creating a budget that works for you. By prioritizing your needs and cutting back on unnecessary wants, you can save money, reduce debt, and achieve your financial goals.

Remember, needs are the essential items you require to survive, such as food, shelter, and clothing. Wants are the non-essential items that you desire, such as entertainment, vacations, and luxury items.

When creating a budget, it’s important to differentiate between your needs and wants. Start by identifying your fixed expenses, such as rent or mortgage payments, utilities, and insurance. Then, allocate funds for your variable expenses, such as groceries, transportation, and medical expenses.

Once you have accounted for your needs, you can allocate funds for your wants. However, it’s important to prioritize and limit your wants to avoid overspending. Consider setting a budget for discretionary spending, such as dining out or entertainment, and stick to it.

By understanding your needs and wants and creating a budget that reflects them, you can achieve financial stability and peace of mind. Remember to regularly review and adjust your budget as necessary to ensure that you are staying on track and meeting your financial goals.

Frequently Asked Questions

What should be considered when creating a budget?

When creating a budget, you should consider your income, expenses, and financial goals. It is important to have a clear understanding of your income sources and the amount of money you have available to spend. You should also identify your expenses, including both needs and wants, and prioritize them based on their importance. Finally, you should set financial goals and allocate your money accordingly.

What is the definition of spending wants?

Spending wants are expenses that are not essential to your survival or well-being but are desired for personal enjoyment or satisfaction. These can include things like entertainment, vacations, hobbies, and luxury items.

How do our psychology affect our needs and wants?

Our psychology can affect our needs and wants by influencing our perceptions and priorities. For example, our emotions, beliefs, and values can impact how we interpret our needs and wants and how we prioritize them. Additionally, our experiences and environment can shape our preferences and desires.

What are some examples of financial needs?

Financial needs are expenses that are essential to your survival or well-being. These can include things like housing, food, healthcare, transportation, and basic clothing.

What are some examples of wants in life?

Wants in life can vary from person to person and can include things like entertainment, vacations, hobbies, luxury items, and personal experiences.

Why is it important to distinguish between needs and wants in budgeting?

Distinguishing between needs and wants in budgeting is important because it helps you prioritize your expenses and allocate your money effectively. By identifying your needs and wants, you can ensure that you are meeting your essential expenses while also allowing yourself to enjoy the things that bring you personal satisfaction. This can help you achieve your financial goals and improve your overall financial well-being.

This weeks action steps:

Start using the budgeting spreadsheet I wrote about and provided through the free link in this article: Free Budget Spreadsheet.

What Are TEFRA And DEFRA Tax Citations?

Written by Martin Hamilton in Investing,IUL Last Updated October 6, 2023

Tetra and Defra tax citations are acronyms that stand for the Tax Equity Fiscal Responsibility Act of 1982 and the Deficit Reduction Act of 1984, respectively. These acts were created in response to the introduction of max funded insurance contracts by E.F Hutton in 1980, which allowed individuals to put in the most premium possible while having the least amount of insurance that the IRS would allow.

The IRS challenged this concept, leading to court cases and eventually the creation of Tefra and Defra, which dictate the minimum amount of insurance required for establishing an insurance contract primarily for living benefits. Understanding the concepts of Tefra and Defra is crucial for individuals seeking to accumulate and access their money tax-free, and ultimately transfer it tax-free upon their passing.

Key Takeaways

Tefra and Defra tax citations were created in response to the introduction of max funded insurance contracts by E.F Hutton in 1980.
These acts dictate the minimum amount of insurance required for establishing an insurance contract primarily for living benefits.
Understanding Tefra and Defra is important for individuals seeking to accumulate and access their money tax-free while also being able to transfer it tax-free upon their passing.

Understanding Tetra and Defra Tax Citations

Tetra and Defra tax citations are acronyms that stand for the Tax Equity Fiscal Responsibility Act of 1982 and the Deficit Reduction Act of 1984, respectively. These acts were created to redefine what tax-free life insurance is under sections 72(E) and 7702 of the tax code. The purpose of these acts was to prevent people from abusing these sections of the code, which allow for tax-free accumulation and access in insurance contracts.

When setting up an insurance contract for the purpose of living benefits, the minimum amount of death benefit required under Tefra and Defra must be justified. The amount of insurance required goes down as the insured gets older, which means that the cost of the insurance also decreases. The cost of the insurance is like a spigot on the bucket and must be present under Tefra and Defra.

The key to understanding Tefra and Defra is to establish an insurance contract, a bucket, or a repository to put money primarily for living benefits. The minimum amount of insurance required must be justified, and the amount of money put into the contract is the maximum allowed. The compound interest earned on the money put into the contract is tax-free under Section 72(E).

Tefra and Defra gave parity, which means that the cost of insurance goes down as the insured gets older. This ensures that people of all ages have an equal opportunity to establish an insurance contract primarily for living benefits. The parity provision ensures that people of all ages can benefit from the tax-free accumulation and access in insurance contracts.

Origins of Tefra and Defra

Tefra and Defra are tax citations that were created under the Tax Equity and Fiscal Responsibility Act of 1982 and the Deficit Reduction Act of 1984, respectively. These acts were created in response to the popularity of max funded insurance contracts, which allowed individuals to put in the least amount of insurance and the most premium, resulting in a tax-free accumulation of money that could be accessed tax-free and transferred tax-free upon death.

The IRS challenged these contracts, claiming that they were being abused, and went to court with E.F Hutton, the creator of max funded insurance contracts. E.F Hutton won the case, but the IRS went to Congress to redefine tax-free life insurance under the sections of the code that allowed for tax-free accumulation and access in insurance contracts.

Under Tefra and Defra, a minimum amount of insurance is required to be purchased in order to justify the amount of money being put into the contract. This minimum amount of insurance is required to ensure that the contract does not move over to taxable investment sections of the code.

The amount of insurance required under Tefra and Defra decreases as the individual gets older, which means that the cost of insurance also decreases. This gives individuals of all ages an equal opportunity to take advantage of max funded insurance contracts. The technical and miscellaneous Revenue Act of 1988, also known as Tamra, requires that the funding for these contracts be spread out over a minimum of 5 years for universal life and 7 years for whole life.

In summary, Tefra and Defra were created to regulate max funded insurance contracts, ensuring that a minimum amount of insurance was purchased to justify the tax-free accumulation of money. These acts provided parity, allowing individuals of all ages to take advantage of these contracts, and required that the funding for these contracts be spread out over a minimum number of years.

Concept of Max Funded Insurance Contracts

Max funded insurance contracts were first introduced by E.F Hutton in 1980. The concept involves having the least amount of insurance that the IRS will allow and putting in the most premium possible. This strategy converts the insurance contract into a living benefit, which can be accessed tax-free while the policyholder is still alive. Furthermore, when the policyholder passes away, the policy blossoms and transfers tax-free.

To ensure that these contracts are compliant with tax regulations, the IRS introduced Tefra and Defra tax citations. Tefra stands for the Tax Equity Fiscal Responsibility Act of 1982, while Defra stands for the Deficit Reduction Act of 1984. These acts redefined what tax-free life insurance is under sections 72(E) and 7702 of the tax code.

Under Tefra and Defra, a minimum death benefit is required to qualify for insurance. The policyholder must also have a certain amount of income or net worth to justify the amount of insurance they are applying for. The minimum death benefit required under Tefra and Defra is the least amount of insurance that a policyholder can have, while still being able to put in the maximum amount of premium.

For example, if a policyholder wants to reposition $500,000, they are allowed to put in that amount as premium. The compound interest that they earn on that $500,000 is tax-free under Section 72(E). However, to ensure that the policyholder is not abusing these tax-free benefits, Tefra and Defra require a commensurate amount of life insurance to come along for the ride. This means that the policyholder must still qualify for insurance and have a reason and justification for the amount of insurance they are applying for.

The cost of the insurance required under Tefra and Defra tax citations decreases as the policyholder gets older. This means that older policyholders can have a lower amount of insurance and still be grandfathered to put in the maximum amount of premium. This is where the concept of parity comes into play. Parity ensures that the cost of the insurance required under Tefra and Defra tax citations is fair and equal, regardless of the policyholder’s age or health status.

In summary, max funded insurance contracts are a strategy for accumulating money tax-free, accessing it tax-free, and transferring it tax-free upon death. Tefra and Defra tax citations ensure that these contracts are compliant with tax regulations, while also providing a fair and equal opportunity for policyholders of all ages and health statuses.

IRS Challenge and Court Case

In the 1980s, EF Hutton, the company behind max-funded insurance contracts, introduced the concept of having the least amount of insurance allowed by the IRS and putting in the most premium. This allowed for tax-free accumulation and access to the money, with the added benefit of tax-free transfer upon death. However, the IRS challenged EF Hutton and its clients, resulting in a court case that EF Hutton won. The IRS then went to Congress to redefine tax-free life insurance under sections 72(E) and 7702 of the tax code. This led to the Tax Equity and Fiscal Responsibility Act of 1982 (Tefra) and the Deficit Reduction Act of 1984 (Defra), which established the Tefra, Defra tax citation or corridor.

Under Tefra and Defra, a minimum amount of insurance is required for an insurance contract primarily used for living benefits. The minimum amount of insurance required decreases as the insured person gets older, ensuring parity among all ages. The cost of the insurance required under Tefra and Defra tax citations decreases with age as well. This allows for the establishment of an insurance contract, or a bucket, for the purpose of living benefits with the least amount of insurance and the most premium allowed by the IRS. The compound interest earned on the premium is tax-free under Section 72(E), and the growth is accessible tax-free. Upon death, the money blossoms and transfers tax-free under sections 72(E), 7702, and 101(A). The amount of money that can be put into the insurance contract is not limited, but a commensurate amount of life insurance is required to ensure that the contract stays tax-free. Tamra, the Technical and Miscellaneous Revenue Act of 1988, requires that funding for universal life insurance contracts be spread out over a minimum of five years.

Tefra, Defra and Tamra Tax Citations

Tefra and Defra are acronyms that stand for the Tax Equity Fiscal Responsibility Act of 1982 and the Deficit Reduction Act of 1984, respectively. These acts were introduced after the IRS challenged EF Hutton’s max funded insurance contracts, which allowed clients to put in the least amount of insurance possible and the most premium allowed by the IRS. The IRS challenged EF Hutton, and they went to court, where they won. However, the IRS went to Congress and said that EF Hutton was abusing the tax-free accumulation and access sections of the code for insurance contracts.

In 1982, under the Tax Equity Fiscal Responsibility Act (Tefra), the IRS attempted to redefine tax-free life insurance under the sections of the code that allowed for tax-free accumulation and access in insurance contracts. Two years later, they had to redefine it again under the Deficit Reduction Act (Defra). This became the Tefra, Defra tax citation or corridor, which established the minimum amount of insurance required for an insurance contract to be grandfathered to grow tax-free, be able to access growth tax-free, and transfer tax-free when the policyholder dies.

The Tefra and Defra tax citations require that the policyholder establishes an insurance contract, a bucket or repository, primarily for living benefits. The minimum death benefit required under Tefra and Defra is established to qualify for insurance and have a reason and justification for the amount of insurance applied for. The policyholder is allowed to put in the amount of money they choose to, but the minimum amount of insurance required under Tefra and Defra must come along for the ride to ensure that the contract does not move over to the taxable investment section of the code.

The Technical and Miscellaneous Revenue Act of 1988 (Tamra) requires that funding for universal life insurance contracts be spread out over a minimum of 5 years. If it is a whole life insurance contract, it is usually spread out over 7 years, known as the 7-pay test. The Tefra and Defra tax citations give parity, which means that the amount of insurance required goes down as the policyholder gets older, ensuring that the cost of insurance is fair for all policyholders, regardless of age.

Insurance Contract as a Living Benefit

The concept of max funded insurance contracts, introduced by E.F Hutton in 1980, emphasized the idea of having the least amount of insurance with the most premium in order to turn it into a cash cow as quickly as possible. However, the Internal Revenue Service (IRS) challenged this approach, leading to the creation of the Tax Equity and Fiscal Responsibility Act of 1982 (Tefra) and the Deficit Reduction Act of 1984 (Defra).

Under Tefra and Defra, establishing an insurance contract for the purpose of living benefits requires justification for a minimum death benefit and a commensurate amount of insurance. The minimum death benefit required under Tefra and Defra serves as the foundation for the insurance contract, while the premium amount can be chosen by the client. The compound interest earned on the premium amount is tax-free under Section 72(E) of the Internal Revenue Code.

To ensure that the insurance contract remains tax-free, Tefra and Defra require a commensurate amount of insurance to accompany the premium amount. This is where the concept of parity comes in. Parity ensures that the cost of insurance required under Tefra and Defra tax citations decreases as the client gets older, making it fair for all clients regardless of age.

In summary, establishing an insurance contract for the purpose of living benefits requires justification for a minimum death benefit and a commensurate amount of insurance. Tefra and Defra tax citations ensure that the insurance contract remains tax-free and fair for all clients.

Minimum Death Benefit Requirement

Under the Tefra and Defra tax citations, there is a minimum death benefit requirement that must be met in order to establish an insurance contract for the purpose of living benefits. This requirement is in place to ensure that the insurance contract does not move over to the taxable investment section of the code and stays tax-free.

The minimum death benefit required under Tefra and Defra varies depending on the age of the individual. As individuals get older, the amount of insurance required under Tefra and Defra tax citations goes down. For instance, a 22-year-old individual who wants to be grandfathered to put in $500,000 into their bucket may be required to have $5 million of life insurance. On the other hand, a 67-year-old individual who wants to be grandfathered to put in $500,000 may only need $1,250,000 of insurance.

It is important to note that individuals still have to qualify for insurance and have reason and justification for the amount of insurance they are applying for. There is a certain amount of income or net worth required to have a certain amount of insurance. When setting up an insurance contract for the purpose of living benefits, the goal is to have the least amount of insurance required under Tefra and Defra. The amount of money an individual chooses to put in is up to them, but it is recommended that they put in the maximum amount allowed to be grandfathered to grow tax-free, be able to access their growth tax-free, and have it transfer tax-free upon their death under sections 72(E), 7702, and 101(A).

All of the compound interest earned on the amount put into the insurance contract is tax-free under Section 72(E). The funding of the insurance contract must be spread out over a minimum of 5 years if it is universal life and 7 years if it is whole life under the Technical and Miscellaneous Revenue Act of 1988 (Tamra). Universal life is more flexible and usually outperforms whole life by about 2 percentage points.

In summary, the minimum death benefit required under Tefra and Defra tax citations is in place to ensure that insurance contracts established for the purpose of living benefits stay tax-free. The amount of insurance required varies depending on the age of the individual, and individuals must still qualify for insurance and have reason and justification for the amount of insurance they are applying for. It is recommended that individuals put in the maximum amount allowed to be grandfathered to grow tax-free, be able to access their growth tax-free, and have it transfer tax-free upon their death under sections 72(E), 7702, and 101(A).

Establishing an Insurance Contract

When setting up an insurance contract, the first step is to understand the hoops that need to be jumped through in order to accumulate money tax-free, access it tax-free, and transfer it tax-free when the person passes away. The Tax Equity and Fiscal Responsibility Act of 1982 (Tefra) and the Deficit Reduction Act of 1984 (Defra) are two acts that help establish the minimum death benefit required for an insurance contract.

The idea behind Tefra and Defra is to have the least amount of insurance necessary to justify the maximum premium. This approach allows for the accumulation of money tax-free and access to growth tax-free. When the person passes away, the money blossoms and transfers tax-free under sections 72(E), 7702, and 101(A).

The minimum death benefit required under Tefra and Defra is determined by the amount of money the person wants to put into the contract. For example, if a person wants to put in $500,000, the minimum death benefit required would be dictated by Tefra and Defra.

It is important to note that a person must qualify for insurance and have a reason and justification for the amount of insurance they are applying for. The amount of insurance required under Tefra and Defra decreases as the person gets older. This means that a 22-year old may be required to have $5 million of life insurance to put in $500,000, while a 67-year old may only need $1,250,000 of insurance to put in the same amount.

Tefra and Defra also require a commensurate amount of life insurance to come along for the ride. This means that the person must have a certain amount of insurance to ensure that the contract does not move over to the taxable investment section of the code.

In summary, Tefra and Defra help establish the minimum death benefit required for an insurance contract. The amount of insurance required decreases as the person gets older, and a commensurate amount of life insurance is required to come along for the ride. By using these acts, a person can establish an insurance contract that allows for tax-free accumulation and access to growth, as well as tax-free transfer upon passing away.

Understanding Parity in Tefra and Defra

Tefra and Defra are tax citations that were established under the Tax Equity and Fiscal Responsibility Act of 1982 and the Deficit Reduction Act of 1984, respectively. These citations were created to regulate tax-free accumulation and access in insurance contracts and to ensure that individuals were not abusing the sections of the code which allowed for such benefits.

Under Tefra and Defra, individuals are required to establish an insurance contract with a minimum death benefit. This minimum death benefit is determined based on the amount of money an individual chooses to put into the contract. For instance, if an individual wants to put in $500,000, they must establish a minimum death benefit that justifies the amount of insurance they are applying for.

The neat thing about Tefra and Defra is that they give parity, which means that the cost of the insurance required under these citations goes down as individuals get older. This ensures that individuals of all ages have an equal opportunity to establish an insurance contract for living benefits, regardless of their age or health status.

The amount of insurance required under Tefra and Defra tax citations is commensurate with the amount of money an individual chooses to put into their insurance contract. This ensures that the contract stays tax-free and does not move over to taxable investment sections of the code.

In summary, Tefra and Defra tax citations were established to regulate tax-free accumulation and access in insurance contracts. These citations ensure that individuals establish an insurance contract with a minimum death benefit that justifies the amount of money they are putting into the contract. Additionally, Tefra and Defra give parity, which means that the cost of the insurance required under these citations goes down as individuals get older. This ensures that individuals of all ages have an equal opportunity to establish an insurance contract for living benefits.

How to Budget for Vacation: A Comprehensive Guide

Written by Martin Hamilton in Budgeting Last Updated October 5, 2023

Vacations are meant to be a time of relaxation and rejuvenation, but the cost of planning a trip can be overwhelming. To avoid this, it’s important to establish a specific goal and financial plan. This can help alleviate the stress that comes with vacation planning and ensure a successful trip.

Regular saving is another key component to making your dream vacation a reality. By planning and setting aside money in advance, you can avoid the financial strain that comes with last-minute expenses. Additionally, money-saving hacks can help stretch your dollars while traveling, allowing you to enjoy your vacation to the fullest.

Key Takeaways

Establishing a specific goal and financial plan are crucial for a successful vacation.
Regular saving can help avoid financial strain and last-minute expenses.
Money-saving hacks can help stretch your dollars while traveling.

Why Create a Vacation Budget?

Creating a budget for your vacation can reduce stress and ensure that you can afford the trip without going into debt. According to Jesse Mecham, founder of the budgeting app You Need a Budget (YNAB), a budget is the tool that turns travel dreams into reality. By creating budget categories for travel and saving money towards those goals, you can completely disconnect and enjoy a trip you know you can afford. This will also prevent you from paying for your vacation for weeks, months, and even years later. A vacation budget will provide you with a clear picture of your expenses and help you make informed decisions about your trip.

4 Money Tips to Make Your Dream Vacation a Reality

1. Set Your Sights on a Goal

To budget for your dream vacation, start with the fun part: dreaming, researching, and planning. Consider where you want to go, when you want to go, and how much money the trip will cost. You may not be able to estimate the exact cost, but you can get a reasonable estimate by considering airfare, lodging, transportation, activities, pet care, souvenirs, food, and more. Putting a vision together for your vacation is a great way to start the budgeting process.

2. Do Plenty of Research

Basic research and estimates can help you get initial costs down on paper. Google Travel, Reddit, Facebook groups, blogs, websites, and other forums have more information than ever before. During your research, you may find that traveling to some places is less expensive than others. Travel blogger Drew Binsky advises choosing countries wisely. If you want to travel and don’t have a big budget, go to Southeast Asia, central Asia, or some Latin American countries. Doing research early will enable you to take advantage of deals when you see them.

3. Use Smart Strategies for Saving

Saving money for a vacation isn’t always easy, but there are some smart strategies that can help. Breaking down the amount by day, week, or month makes the goal more attainable. Establishing a sinking fund for a planned expense, such as a vacation, can help you feel good about taking the money out when it’s time to book. Setting money aside in a separate bank account makes it less tempting to access. Automating savings by designating a portion of your earnings to be automatically deposited into your vacation fund is also helpful. Additionally, reducing discretionary spending in other parts of your budget can help you save money for your dream vacation.

4. Learn Money-Saving Travel Hacks

To get the most out of your money, there are some smart money-saving hacks to help your dollar go further. Being flexible with dates and times is the first step in making your vacation dollars go further. Going when prices are low, such as during shoulder seasons, can also help you save money. Using your credit card reward points can be a powerful and valuable tool for taking a huge chunk out of your vacation expenses. Subscribing to a flight deal alert service and finding discounts can also help you save money. Knowing the most cost-efficient way to get around can also save you a lot of money. By exploring cities by foot or bike, you can go at your own pace and deeply experience a place.

Prepare for the Unexpected

No matter how well-planned a vacation may be, things can still go wrong. To avoid financial emergencies, it’s important to be prepared.

For international travelers, knowing the location of your home country’s embassy can be helpful in case of an emergency. Embassies may be able to provide emergency financial assistance if needed. Additionally, carrying emergency cash and keeping a backup credit or ATM card can be beneficial in case of a financial crisis.

Travel insurance is another option to consider. It can protect against financial risks and losses such as emergency medical care and transportation, lost or stolen baggage, and even identity theft.

By taking a smart approach to financial planning, travelers can enjoy their vacation without worrying about the cost. Remember, a vacation is meant to provide relief from everyday stresses and leave travelers feeling refreshed and recharged.

Alene Laney, an award-winning personal finance and real estate journalist based in the Southwest, recommends taking these steps to avoid financial emergencies while traveling.

Frequently Asked Questions

What is a Realistic Budget for a Vacation?

Determining a realistic budget for a vacation depends on various factors, such as the destination, the duration of the trip, the type of accommodation, and the activities planned. Generally, it is recommended to allocate around 30% of the total budget for accommodation, 20% for transportation, 20% for food, and 30% for activities and souvenirs.

How Much Should I Budget for Vacation?

The amount of money to budget for a vacation depends on the individual’s financial situation and preferences. It is recommended to start by calculating the total cost of transportation, accommodation, food, and activities, and then adding a buffer for unforeseen expenses. It is also important to set priorities and allocate more money to the activities and experiences that are most important to the traveler.

How Do I Start a Budget for a Vacation?

Starting a budget for a vacation involves determining the total amount of money available for the trip, identifying the major expenses, and allocating funds accordingly. It is recommended to use a spreadsheet or a budgeting app to keep track of expenses and adjust the budget as needed. It is also important to research the destination and look for deals and discounts on flights, accommodation, and activities.

Is $100 a Day Enough for Vacation?

Whether $100 a day is enough for vacation depends on the destination and the type of activities planned. In some countries, $100 a day can cover accommodation, food, and transportation, while in others, it may only be enough for food and some activities. It is recommended to research the destination and the cost of living before setting a daily budget.

How to Plan a Vacation?

Planning a vacation involves several steps, such as choosing a destination, setting a budget, booking flights and accommodation, and planning activities and experiences. It is recommended to start planning early and to research the destination thoroughly, including the weather, the culture, and the local customs. It is also important to consider travel insurance and to make sure all necessary documents, such as passports and visas, are up to date.

Budget for Food on Vacation?

Budgeting for food on vacation depends on the destination and the type of food preferred. It is recommended to research the local cuisine and the cost of food in the destination, and to allocate a reasonable amount of money accordingly. It is also important to consider the type of accommodation, as some options, such as apartments or hotels with kitchens, may allow for cooking meals and saving money on food expenses.

Understand The Difference Between Earned, Passive And Portfolio Income

Written by Martin Hamilton in Investing Last Updated October 3, 2023

Understanding Income Types:

Understand The Difference Between Earned, Passive And Portfolio Income

In order to optimize assets, minimize taxes, and empower authentic wealth, it is important to understand the different types of income and their tax implications.

According to financial strategist and retirement planning specialist and one I have followed for over 15 years, Doug Andrew, there are three types of income that are subject to income tax: earned income, passive income, and portfolio income.

Earned income is what one earns through salaries or wages. This type of income is subject to income tax as well as FICA and Medicare taxes. Passive income, on the other hand, is income that is earned through rental properties or leasing and is not subject to FICA and Medicare taxes. Portfolio income includes interest, dividends, and growth on investments and is also not subject to FICA and Medicare taxes.

It is important to note that there is also a type of income that is tax-free and not subject to any of these three categories. This is where a properly structured and funded maximum funded indexed universal life insurance policy comes in. According to Andrew, if structured correctly and funded properly, this type of policy passes the liquidity, safety, and rate of return test with flying colors and is totally tax-free.

Some may wonder why this type of policy is tax-free. Andrew explains that the IRS actually dictates why it is tax-free under three sections of the Internal Revenue code. Despite concerns that the IRS may close this loophole, Andrew assures that it is unlikely as it has been in place since the 1986 tax reform act.

In summary, understanding the different types of income and their tax implications is crucial in making informed financial decisions. Earned income, passive income, and portfolio income are the three types of income subject to income tax, while a properly structured and funded maximum funded indexed universal life insurance policy can provide tax-free income.

The Concept of Maximum Funded Indexed Universal Life Insurance

Maximizing the funded indexed universal life insurance policy is one of the favorite financial vehicles of Doug Andrew, a financial strategist and retirement planning specialist. He has been helping thousands of people optimize their assets, minimize taxes, empower their authentic wealth, and accumulate money for long-term goals such as retirement.

When structured correctly and funded properly, a maximum funded indexed universal life insurance policy passes the liquidity safety rate of return test with flying colors and is totally tax-free. Three sections of the Internal Revenue Code dictate why it is tax-free, according to Doug Andrew. Since the 1986 tax reform, Americans pay income tax on only three types of income: earned, passive, and portfolio income.

Earned income is what people earn by working, usually in the form of salaries or wages. People have to pay income tax plus FICA (Federal Insurance Contributions Act) and Medicare taxes on earned income. Passive income is rental income from rental homes, apartments, equipment, or leasing, and people do not have to pay FICA and Medicare taxes on it. Portfolio income is interest, dividends, and growth on money inside investments, and people do not have to pay FICA and Medicare taxes on it.

A properly structured maximum funded indexed universal life insurance policy is not deemed earned, passive, or portfolio income, and people do not have to pay income tax on it. A maximum funded indexed universal life insurance policy, also known as a laser fund, is a liquid asset that can safely earn returns. It has six major advantages over a Roth IRA, which has only two advantages.

Doug Andrew recommends a maximum funded indexed universal life insurance policy over an IRA or 401k because it is not subject to tax on earned, passive, or portfolio income. It is a dream solution for a lot of financial goals because it is liquid, safe, and not at risk in the market. The returns are linked to what the market does using an index, but the money is not at risk in the market.

Advantages of the Laser Fund Over Traditional Investment Accounts

Benefits of the Laser Fund

A laser fund is a properly structured maximum funded indexed universal life insurance policy that passes the liquidity safety rate of return test with flying colors. It has six major advantages over traditional investment accounts such as IRAs or 401ks invested in the market. A laser fund is a dream solution for a lot of financial goals as it is liquid, safe, and tax-free.

Why Is the Laser Fund Tax-Free

The laser fund is tax-free because it is not deemed earned passive or portfolio income when money is taken out of the policy. The Internal Revenue Service (IRS) dictates why it is tax-free under three sections of the Internal Revenue code. The cost of insurance is the only cost that the policyholder has to pay, which is around one percent of the rate of return.

The Use of Laser Funds in Various Financial Goals

A laser fund is a versatile financial vehicle that can be used for various financial goals. It can be used as working capital for business, an emergency fund, or as an accumulation vehicle for long-term goals such as retirement. The policyholder can access the money in a few days through electronic funds transfer, making it a convenient option for many.

The Concept of Indexing

A laser fund uses indexing to link the returns to what the market does. The policyholder’s money is not at risk in the market, but they can benefit when the market goes up. This makes it an attractive option for those who want to earn a rate of return without risking their money in the market.

In summary, a laser fund has several advantages over traditional investment accounts. It is tax-free, versatile, and safe, making it a dream solution for many financial goals. The use of indexing also allows policyholders to earn a rate of return without risking their money in the market.

Accessing Money from a Maximum Funded Insurance Contract

A properly structured maximum funded indexed universal life insurance policy can be a great financial vehicle for long-term goals such as retirement. Doug Andrew, a financial strategist and retirement planning specialist, explains that if it is structured correctly and funded properly, it passes the liquidity safety rate of return test with flying colors and it’s totally tax-free.

Many people wonder why it’s tax-free. According to Doug, the IRS dictates why it’s tax-free under three sections of the Internal Revenue code. The laser fund, which is a properly structured maximum funded indexed universal life insurance contract, is an acronym that stands for liquid assets safely earning returns. Doug explains that it really knocks the socks off of most investment accounts like IRAs or 401ks invested in the market and a lot of other investments.

A laser fund has six major advantages, compared to a Roth that only has two. Doug recommends a laser fund because the money you take out of it is not deemed earned passive or portfolio income. As a result, it’s totally tax-free.

Doug recommends that people keep their serious cash accumulated and on deposit inside a portfolio of laser funds. This is because laser funds are totally tax-free and knock the socks off of IRAs or 401ks. They are working capital for business, an emergency fund, and a dream solution for a lot of financial goals.

Doug adds that a maximum funded indexed universal life insurance policy is the brainchild of EF Hutton back in 1980. They realized that some of the best financial money managers in the world are the multi-trillion dollar insurance companies and Industry. They’re the backbone of America and the backbone of the world, having weathered the Great Depression with flying colors.

Insurance Companies as Financial Money Managers

Insurance companies have become one of the most reliable financial money managers in the world. According to Doug Andrew, a financial strategist and retirement planning specialist, insurance companies are the backbone of America and the world. They have weathered the Great Depression with flying colors and have proven to be a safe haven for investors during times of economic turmoil.

One of the most popular financial vehicles that insurance companies offer is a properly structured maximum funded indexed universal life insurance policy. This policy, if structured correctly and funded properly, passes the liquidity safety rate of return test with flying colors and is totally tax-free.

Many people wonder why this policy is tax-free. According to Andrew, the IRS dictates that it is tax-free under three sections of the Internal Revenue code. Since the 1986 tax reform, there are only three types of income that Americans pay income tax on: earned, passive, and portfolio income. Income that is none of these three is totally tax-free.

Earned income is what people earn by working, usually in the form of salaries or wages. When people earn this type of income, they have to pay income tax plus FICA, Social Security, and Medicare. Passive income, on the other hand, is rental income off of a rental home or rental apartments or rental equipment or leasing. Portfolio income is interest and dividends and the growth on money inside of investments.

A laser fund is a properly structured maximum funded indexed universal life insurance contract that is not deemed earned, passive, or portfolio income. This is why the money taken out of a laser fund is not subject to income tax. In fact, a laser fund has six major advantages over a Roth IRA, which only has two advantages.

By using a laser fund, people can accumulate their money for long-term goals such as retirement. It is a dream solution for a lot of financial goals because it is totally tax-free, liquid, and safe. It is also an emergency fund and working capital for business. Since the money is not at risk in the market, people do not lose when the market crashes. Instead, they benefit when the market goes up.

The Role of Banks in the Financial Ecosystem

Banks play a crucial role in the financial ecosystem by providing financial services to individuals and businesses. They act as intermediaries between savers and borrowers, facilitating the flow of funds in the economy. Banks accept deposits from individuals and businesses and use these funds to make loans to other individuals and businesses. This process of borrowing and lending is essential for economic growth and development.

One of the primary functions of banks is to provide loans to individuals and businesses. Banks offer a variety of loans, including personal loans, business loans, and mortgages. These loans help individuals and businesses to finance their projects and achieve their goals. Banks also provide credit cards, which allow individuals to make purchases and pay for them over time.

Banks also offer a range of deposit accounts, including checking accounts, savings accounts, and certificates of deposit. These accounts provide a safe place for individuals and businesses to store their money and earn interest on their deposits. Banks also offer other financial services, such as investment advice, insurance, and wealth management services.

In addition to their role as intermediaries between savers and borrowers, banks also play a critical role in the payment system. Banks facilitate the transfer of funds between individuals and businesses, allowing for the smooth functioning of the economy. Banks also issue credit and debit cards, which allow individuals to make purchases and access their funds.

Overall, banks are an essential part of the financial ecosystem. They provide a range of financial services that help individuals and businesses to achieve their goals and contribute to economic growth and development.

Alternatives to Cable TV: A Comprehensive Guide

Written by Martin Hamilton in Budgeting Last Updated September 30, 2023

Quick Picks:

Looking for the best streaming options? Here are some top picks:

Get FREE local channels with an HD digital antenna.
Get the best bundle pricing with Hulu.
Save money with the least expensive streaming option, Paramount+.
Join the millions of viewers with the most popular streaming service, Netflix.
Enjoy live TV for free with Pluto TV.

1. Netflix

If you’re looking for a streaming service that’s both affordable and convenient, Netflix is a great option. With a wide range of TV programs and films to choose from, it’s easy to find something to watch that suits your interests. Additionally, Netflix offers a lot of original shows that are exclusive to the service.

It’s important to note that Netflix doesn’t offer live TV, so you won’t be able to tune in to your favorite cable channels. However, this also means that you have complete control over what you watch and when you watch it.

At just $6.99 a month for the basic package with ads included, Netflix is an affordable option for anyone on a budget. The basic package allows you to use one screen at a time, and while there aren’t HD options, you still get access to all the movies and shows available on the platform.

If you want to use Netflix on more than one device at a time, you can upgrade to the 2-screen or 4-screen plans for $15.49 and $19.99 per month, respectively. This may be a good option for larger families who want to watch different things at the same time.

Overall, Netflix is a great choice for anyone who wants access to a wide variety of TV shows and movies without breaking the bank.

2. Local Channels: HD Digital Antenna

Looking for a cost-effective way to watch basic cable TV without the need for internet? Consider investing in an HD Digital Antenna. While this option does not include premium channels, it provides access to basic cable channels such as ABC, CBS, NBC, and FOX, among others.

The initial cost of the antenna setup is typically around $20, making it a great alternative to cable TV. However, it is important to note that the types of cable channels available may vary depending on your location. Before cutting the cord for cable, ensure that you have a decent signal. Some areas may require a different type of antenna or one with a longer range if you live further away from a town or city.

Overall, an HD Digital Antenna is a great option for those looking to save money on cable TV while still having access to basic cable channels. No internet is needed for this option, making it a convenient and affordable choice for many households.

3. Hulu

Hulu offers a basic plan for $7.99 per month, which includes commercials, similar to cable TV. However, the cost is significantly lower. If you prefer to watch your shows without commercials, you can upgrade to the $17.99 per month plan. The only downside is that you can only watch Hulu on two streaming devices at a time, unlike Netflix’s top plan, which allows four devices.

If you’re a fan of TV shows, Hulu is a great option because they stream shows on the same day they air. This feature is not available on other streaming services like Netflix. Hulu also offers live TV and channels such as FX, Disney, Discovery, Food Network, and HGTV, providing a wide range of options for every member of your family.

Hulu also offers a bundle with Disney+ and ESPN+ at a discounted price, making it a great choice if you’re looking for multiple streaming services. Overall, Hulu is an affordable and convenient option for streaming TV shows and live TV.

4. YouTube

YouTube is a popular video-sharing platform that is completely free to use. While it may not be the best option for finding TV shows and movies, it is a great source for original content on a wide range of topics. With countless contributors, there is always something new to discover.

One of the best things about YouTube is the vast range of videos available. Whether you are interested in learning something new or simply enjoy watching vloggers, there is a video for everything. You can easily get lost in a YouTube rabbit hole, watching video after video for hours on end.

While some films and shows are available on YouTube, you may have to pay a small fee for access. This is similar to a rental streaming service and allows you to watch specific content at any time.

Overall, YouTube is a fantastic alternative to cable and a great way to discover new content. With its vast library of videos and easy-to-use interface, it is no wonder that it has remained popular for so long.

5. YouTube TV

YouTube TV is a live TV streaming service that offers over 100 channels and networks. It is perfect for those who want access to local news and sports channels. With YouTube TV, you can access your local channels and live TV, as well as other channels and networks such as CNN and ESPN.

You can use YouTube TV on up to 3 streaming devices at a time, which is great for families who want to watch different shows simultaneously. Kids can enjoy channels like Cartoon Network and Disney without any issues.

One of the best features of YouTube TV is the unlimited Cloud DVR for 9 months. You can record as much live TV as you want without worrying about running out of space. However, YouTube TV is a bit more expensive than other options we have looked at, costing $65 a month.

If you’re unsure about switching to YouTube TV, you can take advantage of their free 2-week trial to see if it’s the right fit for you. Overall, YouTube TV is a great option for those looking for a comprehensive live TV streaming service.

6. Sling TV

If you’re looking for a live TV streaming service that’s similar to cable TV, Sling TV might be a good option for you. With Sling Orange and Sling Blue, you can choose from 32 and 43 channels, respectively. Both packages cost $40 per month, but you can get the first month for only $20. If you want both packages, you can get them for $55 per month.

Sling TV is a great choice if you want a more customizable package based on the channels you watch. With Sling TV, you can choose the channels you want and create a package that fits your needs. It’s a great option for those who miss cable TV but want a more flexible and affordable option.

7. Amazon Prime Video

If you have an Amazon Prime account, you already have access to their video streaming service. For $8.99 per month, you can access TV shows and movies. However, if you pay $14.99 a month for Prime membership, you get Prime Video plus Prime Shipping and other perks.

The great thing about Prime Video is that if the content you want to watch isn’t available, you can rent it. Additionally, you can purchase a FireStick streaming device to hook up to your TV and use Prime Video and any other streaming apps you have.

It’s important to note that you won’t have access to sports channels, so that’s something to consider when choosing your best cable TV alternative.

8. Max (HBO)

If you’re looking to stream HBO content without a cable subscription, you can sign up for HBO Max. The service costs $9.99 per month with ads and comes with a free 7-day trial. You can cancel at any time. Alternatively, you can pay $15.99 per month for ad-free streaming on two devices, or $19.99 per month for streaming on up to four devices. HBO Max can also be accessed through other streaming services, including Hulu and Amazon Prime.

9. Local Library

Your local library is not just a place to borrow books anymore. It has evolved into a multimedia center where you can borrow movies and TV shows on DVD. This is a great option for a movie night with friends or family. If you have a library card, borrowing DVDs is free, but make sure to return them on time to avoid late fees.

If your local library doesn’t have what you’re looking for, don’t worry. Libraries work together, so they can request items from other locations and have them mailed to your library. You can also visit other library locations to see what they have to offer.

In addition to physical media, some libraries have online streaming services like Kanopy or Hoopla. Check your local library’s website to see what streaming options they have available.

Overall, your local library is a great resource for entertainment options beyond just books. Take advantage of the many services they offer and explore all that your library has to offer.

10. ESPN +

For sports fans who want to stay up-to-date with the latest games, ESPN + is the perfect solution. This new streaming service is available within the ESPN app, so you won’t need to download anything extra.

With ESPN +, you’ll have access to live games and events, as well as films and more with regional sports networks. The service costs $9.99 per month, but you can bundle it with Hulu and Disney+ for only $12.99 per month for all three services.

11. DIRECTV Stream

If you’re looking for a streaming service that offers live TV, regional sports networks, news, movies, and more, then DIRECTV Stream could be the service for you. Formerly known as AT&T TV Now, DIRECTV Stream provides a cable-like experience, but at a higher price point of $64.99 to $144.99 per month, depending on the package you choose. While it may not be as cost-effective as some other streaming services, it is still less expensive than regular cable. Depending on the package you choose, you can access between 75 to 150+ channels. Additionally, DIRECTV Stream offers access to movies and other live TV options, such as National Geographic and Discovery.

12. Apple TV+

Apple TV+ is a streaming service offered by Apple that aims to compete with other streaming services in the market. The service costs $6.99 per month, which is relatively low compared to other streaming services. One unique aspect of Apple TV+ is that you can get it for free if you purchase an Apple device for 3 months.

In addition to the app, Apple also offers a streaming device for those who prefer it. However, unlike other streaming services, Apple TV+ doesn’t have a vast library of typical shows or movies. Instead, it focuses on producing unique content from its own brand.

While Apple TV+ may not have as much content as other streaming services, it’s catching up and adding more over time. If you’re an Apple device user and enjoy exclusive shows, Apple TV+ may be a great option for you.

13. Disney+

If you’re a Disney fan, you’ll be pleased to know that Disney+ is now available. The platform offers a wide range of content, including the usual Disney classics, as well as Marvel, Pixar, Star Wars, and more. Disney owns an extensive library of content, so you’re sure to find something you’ll enjoy.

The service is priced affordably at $7.99 per month. You can also bundle it with Hulu for $9.99 per month or with Hulu and ESPN+ for $12.99 per month. With this bundle, you’ll have access to a vast library of TV shows, movies, and live sports.

Overall, Disney+ is an excellent choice for anyone who loves Disney and wants to access a wide range of content at an affordable price.

14. Philo

Philo is a streaming service that offers great value for money, providing a cable TV-like experience with a wide range of channel options. With Philo, you can access more than 70 channels, including popular networks like AMC, BBC America, Comedy Central, and Nickelodeon. You can enjoy Philo on all your streaming devices for just $25 per month, with a free 7-day trial. However, one downside of Philo is that it lacks sports channels and news networks.

15. Paramount+

If you’re looking for a cost-effective streaming service, Paramount+ might be the perfect option for you. With its essential plan costing just $5 per month, it’s one of the most affordable options available. You can also sign up for the no-ads plan for only $10 per month.

Paramount+ offers a wide range of shows from popular networks like CBS, Nickelodeon, BET, and Comedy Central. Plus, they’re currently offering a 50% discount on annual plans, which means you can get a subscription for as little as $30 or $50 per year instead of the usual $60 or $100.

Overall, Paramount+ is an excellent choice if you want to save money while still having access to a variety of shows and networks.

16. Free Live TV Streaming Services

If you’re looking to save money on your entertainment budget, there are plenty of free streaming services available. While these services may have ads, they offer access to an endless amount of shows and movies for you and your family to enjoy.

One popular option is Pluto TV, which offers a wide range of channels that you can scroll through just like regular cable. Another option is Freevee, which features a variety of TV shows and movies for free.

Other free streaming services to check out include Crackle, Tubi, Vudu, and Sling Freestream (not to be confused with Sling TV). These services offer a range of content, from classic movies to popular TV shows.

If you’re looking for live TV, DirecTV Stream is a great option, especially for sports channels. However, it’s important to note that this service is not free.

Ultimately, the decision to use a free streaming service with ads or pay for a subscription without ads is up to you. But with so many free options available, it’s worth exploring these services to see if they meet your entertainment needs.

Or… Start a Different Hobby

If you’re tired of spending your free time watching TV, there are plenty of other hobbies you can try. Here are some ideas to get you started:

Reading

Reading is a great way to improve your writing, spelling, grammar, and imagination. Instead of watching TV, try picking up a good book and learning something new. Plus, you could even get paid to read new books or books before they’re published!

Exercise

If you’re worried that TV has taken over your free time, it may be time to try something healthier. Exercise is a great way to improve your physical and mental health. Even if you hate the idea at first, you’ll feel much better afterward.

Get Outside, Be Active

Take advantage of the beautiful country we live in and get outside! Whether it’s a sunny day or a rainy one, a stroll outside is good for you. So instead of watching TV, go for a walk or a hike and enjoy the outdoors.

Play Board Games

Game night is a fun tradition that can bring the whole family together. Instead of watching TV, break out some board games and spend quality time with your loved ones. It’s a great way to make memories and have fun.

Start a Side Hustle

Starting a side hustle can be a great way to spend your free time and make some extra money. There are plenty of options to choose from, so pick something you enjoy. Here are some ideas to get you started:

Side Hustle	Description
Become a Proofreader	Love to read? Get paid to read others’ work and find spelling/grammatical errors.
Take Online Surveys	Answer quick questions for money while you wait in the doctor’s office or even sit on the toilet.
Start a Money Making Blog	Write about your passions and make money from it.
Start a Facebook Side Hustle	Create Facebook ads for businesses and get paid $25+ per hour.
Become a Freelance Writer	Make $20+ per hour writing for clients.

So instead of spending all your free time watching TV, try one of these hobbies instead. You might just discover a new passion!

FAQs

What are the best streaming services?

Netflix is the most popular streaming service, but the best one for you depends on your needs. For live TV with unlimited Cloud DVR, YouTube TV might be your best bet. If you can’t afford streaming services, a free streaming service like Pluto TV might be best. If you can afford less than $20 a month on streaming, you can get Hulu or even bundle it with Disney+ and ESPN+ for only $12.99 per month. Or, if you want specific live TV channels, you can pay $40 a month with Sling TV. Any one of these options will still save you money compared to regular cable, so one or multiple services might be the best pick(s) for you.

How much money can you save cutting the cord?

The amount of money you can save by cutting the cord depends on how much you were originally paying for your cable and which streaming service you decide to go with. For example, if you were paying around $100 for your cable, choosing a streaming service like Netflix at $9 per month would save you $1092 per year. However, if you stick strictly with free streaming services, you’ll save much more every year. Just be careful to pay for only the services you use.

Do you need internet to use cable alternatives?

Yes, you need the internet to use cable alternatives like YouTube TV, Sling TV, and Apple TV+. Most streaming services or live TV are through apps or websites, meaning you’ll need devices to use and the internet to connect to. However, it’s possible to get free or cheaper internet options from your provider. If you already pay for data, especially unlimited data, you could use your phone to watch these cable alternatives. Additionally, borrowing physical movies from the library with your library card doesn’t require internet access.

Fall Financial Checklist: Tips for Keeping Your Finances in Order This Autumn

Written by Martin Hamilton in Newsletter Last Updated September 30, 2023

As we transition into the fall season, it’s important to start thinking about our finances and what we can do to make the most of the remaining months of the year.

Whether it’s preparing for the winter months ahead or beefing up our retirement savings, there are a variety of smart money moves we can make to ensure our financial success. In this article, I will provide you with a fall financial checklist to help you stay on track and make the most of this season.

This checklist includes tasks such as signing up for health insurance, preparing your home for winter, gathering important documents, and not missing out on employee benefits. While not all of these tasks may be applicable to everyone, this checklist is a great place to start and ensure that you are taking the necessary steps to improve your financial situation. So, let’s dive in and make this fall a productive and financially successful season.

Key Takeaways

Fall is a great time to start thinking about our finances and what we can do to prepare for the remaining months of the year.
A fall financial checklist can help us stay on track and make smart money moves such as signing up for health insurance, preparing our homes for winter, and not missing out on employee benefits.
By taking the necessary steps outlined in this checklist, we can improve our financial situation and make the most of this season.

Here is my fall financial checklist.

Figure out your health insurance

I recommend doing research on the best health insurance plan for you and your family before the open enrollment for 2024 through the Health Insurance Marketplace starts on November 1. If you have private health insurance or health insurance through your employer, find out the important dates to sign up by or get information to them by.

Maximize your retirement savings

Now is the time to contribute as much as you can to your retirement savings. Even if you can’t max it out, see if there’s any more that you can contribute to your savings and retirement funds.

Prepare your home for colder months

Take time to prepare your home for the colder months ahead. Inspect and tune-up your heating system, clear your gutters, test your smoke and carbon monoxide detectors, clean your chimney and/or fireplace, insulate your windows, and install a programmable thermostat. Reverse ceiling fans so that heat is pushed down.

Budget for the holiday season

Create a holiday budget and start saving money for the holidays. Find ways to make extra money if you think your budget is cutting it close.

Build an emergency binder for you and your family

Create an emergency binder to store financial information, such as health insurance, financial accounts, where to find certain documents, medical, and more. This can be useful in non-emergencies as well. The In Case of Emergency Binder can help you with creating your own emergency binder.

Find life insurance

Looking at life insurance is extremely important if you do not have this yet. Life insurance is money for your family if you were to pass away. If you are the sole or primary earner in your family, then there are probably a lot of people who rely on you financially. I recommend looking at an Indexed Universal Life Insurance plan because it offers great returns for retirement.

Use your paid time off

Make a plan to use your vacation days from your employer that will expire at the end of the year or days that can’t be cashed out. Take a full week off or turn your weekends into long weekends.

Review your free credit report

You can receive one annual free credit report from the three main credit bureaus. I recommend spacing them out so you can get one every four months.

Find cheaper car insurance

Shopping around for car insurance is something that most people do not do, and it can cost you tens of thousands of dollars over your lifetime. By simply comparing insurance rates, you may be able to save over $1,000 yearly. You can shop car insurance rates through Get Jerry.

Have a money meeting

Have a money meeting to discuss topics such as debt, budget, financial goals, and retirement savings. Discuss things with your family and take it further and get in touch with a financial planner if you haven’t done so already.

Stop paying for cable TV

Find an alternative to cable TV to cut your budget. You can read more about the different cable TV alternatives at Alternatives to Cable TV: A Comprehensive Guide.

Find a rewards credit card

Using a rewards credit card means that you can gain points that you can use to get cheap travel or cash back. You can earn airline tickets, gift cards, hotel stays, cash, etc., all for simply using your credit card. Two cards I recommend are Chase Freedom Flex and Chase Sapphire Preferred.

Apply for an online job

There are many ways to apply online for jobs. You can work locally or look for something online. You may want to review this article about side hustles and find something that suits you.

Frequently Asked Questions

What are some common financial tasks to complete before the end of the year?

As the year comes to a close, there are a few financial tasks that you should consider completing. Some common tasks include:

Reviewing your budget and making any necessary adjustments
Maximizing your contributions to retirement accounts
Reviewing and updating your insurance policies
Reviewing your credit report and correcting any errors
Making charitable donations for tax purposes

What is the 50/30/20 rule in personal finance?

The 50/30/20 rule is a popular personal finance guideline that suggests allocating your income as follows:

50% for necessities like housing, utilities, and food
30% for discretionary spending like entertainment and dining out
20% for savings and debt repayment

This rule can help you prioritize your spending and ensure that you are saving enough for the future.

What are some ways to prepare financially for the upcoming holiday season?

The holiday season can be a major expense for many people. To prepare financially, consider:

Creating a holiday budget and sticking to it
Starting your shopping early to take advantage of sales and avoid last-minute panic purchases
Considering alternative gift-giving options like homemade gifts or experiences
Setting realistic expectations with friends and family about gift-giving

What are some important steps to take when reviewing your investment portfolio?

When reviewing your investment portfolio, it’s important to:

Check that your portfolio is still aligned with your goals and risk tolerance
Rebalance your portfolio if necessary to maintain your desired asset allocation
Review the fees you are paying and consider lower-cost options
Consider tax implications and strategies for minimizing taxes

What are some strategies for saving money during the fall season?

The fall season can bring its own set of expenses, but there are also opportunities to save money. Consider:

Making your own seasonal decorations instead of buying them
Taking advantage of fall produce sales and cooking at home
Planning outdoor activities like hiking or apple picking instead of costly indoor entertainment
Shopping end-of-season sales for winter clothing and gear

What are some key considerations when creating a budget for the remainder of the year?

When creating a budget for the remainder of the year, it’s important to:

Account for any upcoming expenses like holiday gifts or travel
Consider any changes in income or expenses that may affect your budget
Prioritize your spending to ensure that you are meeting your financial goals
Review your budget regularly and make adjustments as needed to stay on track.

Fall Financial Checklist: Tips for Keeping Your Finances in Order This Autumn

As we transition into the fall season, it’s important to start thinking about our finances and what we can do to make the most of the remaining months of the year. Whether it’s preparing for the winter months ahead or beefing up our retirement savings, there are a variety of smart money moves we can make to ensure our financial success. In this article, I will provide you with a fall financial checklist to help you stay on track and make the most of this season.

Key Takeaways

Fall is a great time to start thinking about our finances and what we can do to prepare for the remaining months of the year.
A fall financial checklist can help us stay on track and make smart money moves such as signing up for health insurance, preparing our homes for winter, and not missing out on employee benefits.
By taking the necessary steps outlined in this checklist, we can improve our financial situation and make the most of this season.

Here is my fall financial checklist in short form.

Figure out your health insurance

Maximize your retirement savings

Now is the time to contribute as much as you can to your retirement savings. Even if you can’t max it out, see if there’s any more that you can contribute to your savings and retirement funds.

Prepare your home for colder months

Budget for the holiday season

Create a holiday budget and start saving money for the holidays. Find ways to make extra money if you think your budget is cutting it close.

Build an emergency binder for you and your family

Find life insurance

Use your paid time off

Make a plan to use your vacation days from your employer that will expire at the end of the year or days that can’t be cashed out. Take a full week off or turn your weekends into long weekends.

Review your free credit report

You can receive one annual free credit report from the three main credit bureaus. I recommend spacing them out so you can get one every four months.

Find cheaper car insurance

Have a money meeting

Have a money meeting to discuss topics such as debt, budget, financial goals, and retirement savings.

Stop paying for cable TV

Find an alternative to cable TV to cut your budget. You can read more about the different cable TV alternatives at 16 Alternatives To Cable TV That Will Save You Money.

Find a rewards credit card

Apply for an online job

Here is a list of jobs and side hustles on or offline that may interest you.

Frequently Asked Questions

What are some common financial tasks to complete before the end of the year?

As the year comes to a close, there are a few financial tasks that you should consider completing. Some common tasks include:

Reviewing your budget and making any necessary adjustments
Maximizing your contributions to retirement accounts
Reviewing and updating your insurance policies
Reviewing your credit report and correcting any errors
Making charitable donations for tax purposes

What is the 50/30/20 rule in personal finance?

The 50/30/20 rule is a popular personal finance guideline that suggests allocating your income as follows:

50% for necessities like housing, utilities, and food
30% for discretionary spending like entertainment and dining out
20% for savings and debt repayment

This rule can help you prioritize your spending and ensure that you are saving enough for the future.

What are some ways to prepare financially for the upcoming holiday season?

The holiday season can be a major expense for many people. To prepare financially, consider:

Creating a holiday budget and sticking to it
Starting your shopping early to take advantage of sales and avoid last-minute panic purchases
Considering alternative gift-giving options like homemade gifts or experiences
Setting realistic expectations with friends and family about gift-giving

What are some important steps to take when reviewing your investment portfolio?

When reviewing your investment portfolio, it’s important to:

Check that your portfolio is still aligned with your goals and risk tolerance
Rebalance your portfolio if necessary to maintain your desired asset allocation
Review the fees you are paying and consider lower-cost options
Consider tax implications and strategies for minimizing taxes

What are some strategies for saving money during the fall season?

The fall season can bring its own set of expenses, but there are also opportunities to save money. Consider:

Making your own seasonal decorations instead of buying them
Taking advantage of fall produce sales and cooking at home
Planning outdoor activities like hiking or apple picking instead of costly indoor entertainment
Shopping end-of-season sales for winter clothing and gear

What are some key considerations when creating a budget for the remainder of the year?

When creating a budget for the remainder of the year, it’s important to:

Account for any upcoming expenses like holiday gifts or travel
Consider any changes in income or expenses that may affect your budget
Prioritize your spending to ensure that you are meeting your financial goals
Review your budget regularly and make adjustments as needed to stay on track.

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Recent Posts

Key Takeaways

Understanding Needs and Wants

The Role of Needs in Budgeting

The Role of Wants in Budgeting

The Impact of Needs and Wants on Personal Finance

Strategies to Balance Needs and Wants in Budgeting

Common Mistakes in Distinguishing Needs and Wants

Mistake #1: Confusing Wants for Needs

Mistake #2: Failing to Prioritize

Mistake #3: Impulse Buying

Mistake #4: Not Considering the Long-Term Costs

Practical Tips for Prioritizing Needs and Wants

1. Create a Needs vs. Wants List

2. Analyze Your Spending Habits

3. Set Realistic Goals

4. Use Cash Envelopes

5. Be Mindful of Sales and Discounts

The Psychological Aspect of Needs and Wants

Conclusion

Frequently Asked Questions

What should be considered when creating a budget?

What is the definition of spending wants?

How do our psychology affect our needs and wants?

What are some examples of financial needs?

What are some examples of wants in life?

Why is it important to distinguish between needs and wants in budgeting?

This weeks action steps:

Key Takeaways

Understanding Tetra and Defra Tax Citations

Origins of Tefra and Defra

Concept of Max Funded Insurance Contracts

IRS Challenge and Court Case

Tefra, Defra and Tamra Tax Citations

Insurance Contract as a Living Benefit

Minimum Death Benefit Requirement

Establishing an Insurance Contract

Understanding Parity in Tefra and Defra

Key Takeaways

Why Create a Vacation Budget?

4 Money Tips to Make Your Dream Vacation a Reality

1. Set Your Sights on a Goal

2. Do Plenty of Research

3. Use Smart Strategies for Saving

4. Learn Money-Saving Travel Hacks

Prepare for the Unexpected

Frequently Asked Questions

What is a Realistic Budget for a Vacation?

How Much Should I Budget for Vacation?

How Do I Start a Budget for a Vacation?

Is $100 a Day Enough for Vacation?

How to Plan a Vacation?

Budget for Food on Vacation?

Understanding Income Types:

The Concept of Maximum Funded Indexed Universal Life Insurance

Advantages of the Laser Fund Over Traditional Investment Accounts

Benefits of the Laser Fund

Why Is the Laser Fund Tax-Free

The Use of Laser Funds in Various Financial Goals

The Concept of Indexing

Accessing Money from a Maximum Funded Insurance Contract

Insurance Companies as Financial Money Managers

The Role of Banks in the Financial Ecosystem

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