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Common Cents departments
Nov/Dec 2010 Issue

Car insurance myths busted

Insurance may not be rocket science, but it can be tricky. What you think you know about it could end up costing you a bundle if you’re wrong. The truth behind these commonly held auto insurance myths could save you time, money and frustration.

RED IS BAD

Have you ever purchased a gray over a cherry red car simply to save on insurance? Many people believe the myth that certain car colors, such as red, increase insurance rates. Actually, color is not a factor in determining insurance rates, but other factors are, including:

  • Year, make and model of vehicle
  • Miles driven per year
  • Age of the driver
  • Credit history
  • Others on policy
  • Driving record

NO SWEAT, I HAVE FULL COVERAGE

There is no such thing as “full coverage.” In most states, only liability insurance is mandatory. There are a lot of other coverage options out there, so select what you need and can afford based on your personal situation.

BUT I HAVE AN OLD CAR

Many times, drivers with an older car think there’s no need for comprehensive insurance. Actually, older cars are hot targets for thieves because they’re easier to steal, and there’s a strong market for older parts. Check your insurance policy and make sure you still have comprehensive insurance in place on your older vehicle to protect against theft and other unanticipated losses.

CUSTOM MADE

Chances are you’ve invested a pretty penny on the custom parts you’ve added to your vehicle, not to mention a lot of time finding the exact parts you want. Remember, custom parts not only make the vehicle look cooler, they bump up its value. Review your policy to make sure it’s sufficient to cover the value of any customizations.

For a AAA insurance quote, call (877) 222-7095.

Geodie Padgett, AAA Going Places magazine

car
Will color affect your new grad’s insurance rate? No, but her age, driving record and annual miles she drives will impact premiums.

 

Budgeting tips for tough economic times

Budgeting and saving can be difficult for many families in a tough economy. However, there are a few simple budgeting tools you can use that are very effective. At the top of the list: know what you spend.

“Good budgeting requires the concurrent use of some type of financial tracking system,” says Steve Martin, president of Martin Wealth Management, a fee-only financial planner based in Fort Collins, Colo. That’s because budgeting is all about comparing what’s coming in with what’s going out, and how closely that tracks to your projected income and expenses.

To help figure it out, Martin suggests using an electronic tracking system such as Microsoft Money, Quicken, Mint.com, or other online budgeting software. Other options include using a paper system or your own spreadsheet. Write it down so you keep track of every cent you spend.

“A budget should encompass an entire income and each category would be assigned a specific dollar amount that can be used,” says Velda Eugenias, founder and chief executive officer of Eugenias Advisory Group in Gadsden, Ala. “If you say you will spend $6,000 [per year] on food then that means each month you can only spend $500 a month on food. So if you splurge one month, you cut back the next month.”

After you’ve tracked your expenses for a while, set up a budget and followed it, you should set aside some of your savings into an emergency fund. Put emergency-fund cash–enough for at least six months–into savings accounts, money market accounts, or certificates of deposit. For information about AAA’s Deposit Program, visit AAA.com/Deposits or call (888) 728-3151.

Winter travel deals

These AAA travel partners have offers that may help you save on winter travel. Remember to inquire about restrictions before making reservations.

  • AAA members can choose either a daily breakfast, a resort credit of up to $100 or savings of up to 30 percent off the best available rate at Starwood Hotels and Resorts through Dec. 31. Call (866) 222-7283.
  • Take an additional 5-percent discount off Amtrak’s best available adult fares on select routes when booked Nov. 15– Dec. 15 for travel Jan. 18– March 31, 2011. Call (800) 872-7245 (offer code H849).

10 tips to keep your credit cards safe

Most of us when shopping for holiday gifts will use some form of plastic at the mall or over the Internet. Here are 10 tips to help you make the season bright, as well as safer.

  • Safeguard your credit. Treat credit cards like money.
  • Review monthly statements to ensure all charges are accurate.
  • Report billing errors and lost or stolen cards immediately to reduce possible fraudulent activity.
  • Carry credit cards as needed. Reducing the number of cards you carry will decrease exposure to loss or theft.
  • Keep credit card numbers secure. Do not give information over the phone unless you are familiar with the merchant or have initiated the call.
  • Reduce fraudulent charges. Merchants use the signature on the back of your card to verify you are the cardholder. If you prefer they request identification, do not sign the back of the card. This will require a merchant to ask for a driver’s license or similar identification.
  • Track your usage. Keep receipts for your ATM, credit and debit card for reconciliation purposes.
  • Keep a list of your credit card numbers in a safe place, along with the issuer’s telephone number. This can assist you should your card be stolen or lost.
  • Shred pre-approved offers you get in the mail before throwing the papers in the trash as these may contain personal credit card information.
  • Use your credit card over a debit card when making online purchases for better consumer protection.
 

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