Umbrella insurance is a type of insurance that provides extra protection beyond your auto and homeowners insurance. Let’s say that a tree on your property falls and completely destroys a neighbor’s house. You get sued and are ordered to pay $500,000 in damages, but your insurance will only cover $300,000. If you don’t have umbrella insurance, you’re going to have to cover that additional $200k out of your own pocket. Unless you like giving away a couple hundred thousand dollars (if you do, give me a call), you’re probably going to wish you had umbrella insurance. For around two or three hundred dollars a year, you can get an umbrella policy that will provide you with up to $1 million of umbrella coverage.

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Fidelity offers Age-Based 529 investments. Just pick a year.

The best time to save for your children’s college tuition is when your child is born. A small investment now will help them cover their college costs in the future. Say you invest $10,000 when they’re born. Assuming a 12% annualized return, it will grow to about $80,000 by the time the kid’s 18 years old and ready for college. $10,000 investment to pay for $80,000 in school costs? Not a bad price to pay for college at all.

Watch out though: You don’t want a bear market to challenge your kid’s future. You’ll want to secure that fund as cash as the child gets older. Use an age-based 529 investment to save for college.

Age-Based 529 Plans automatically adjust from aggressive (mostly stock investments) to conservative (mostly bonds and cash) as the child comes closer to their project college years. All you have to do is pick a projected year and the fund will handle the rest. The downside is that you pay a bit more in management fees since it’s an actively managed funds. The upside is that you get to spend more of your time playing with your kid instead of balancing their investments.

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The sooner you and your spouse can agree on where the family money goes, the better. The best time to figure out finances is before you’re married when both of your money is separate.

I’m getting married in November. The shared finances discussion has begun. It will continue for the next few months until we’ve covered all of the ground rules. These premarital financial discussions should minimize the fights while we’re married.

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Buy books that are used. Most are in good condition. You’re buying the book for the words so don’t worry that the spine is a little bent or the pages are a bit folded. I just bought a $35 dollar book on Amazon.com for $15 bucks used.

Some people are irked by buying books used. They’re afraid that the previous owner had abused and neglected their book before putting it on the market. Rest assured: They’re nothing wrong with most used books. The previous owner is selling it because they need the money. Or they do what I do and buy books and then not read them.

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Why a picture of Vegas? Why not a picture of Vegas?

With the increasing popularity of home equity loans and home equity lines of credit (HELOCs), many lenders now offer a special “teaser” interest rate for the first few months of your loan. Make sure you find out how long this rate is in effect for and how much the interest rate will rise once the teaser rate expires.

Remember, if something sounds too good to be true, it probably is. Except, of course, for this kind Nigerian fellow that I correspond with via email. He’s inherited about $8 million through a deceased uncle, and if I send him a couple thousand bucks, he’s split the inheritance with me 50/50. I’m gonna be rich!

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Paying the minimum payments on your credit card is what the credit card companies want you to do. They get more money from interest that way. Pay more than the minimum monthly payments or you’ll pay double or triple of what you owed.

$12,000 credit card debt will take you 400 months (30+ years) to pay off if you make the minimum payments each month. You will pay almost $20,000 in interest. The minimum payment gets lower as you pay off the balance. You’ll end up paying for a long time thanks to compounding interest.

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Beginner budgeters like to tighten down their spending too much. They end up blowing their budget and reverting back to their old ways. If you’re a beginner budgeter, don’t budget your money down to the penny. Tighten the screw slowly.

A successful budget is a flexible budget. It should be able to help you during tough times and it should also allow you to reward yourself if your financial situation becomes better than expected. A looser budget that’s easier to keep is better than a tight budget that’s impossible to maintain.

Check out the Binary Dollar 3 part series Effective Budgeting: Why Budget? Building A Budget. Tracking a Budget.

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Just read an article on MSN Money about selling plasma (and other bodily fluids) for cash. It reminded me a lot of my college days when I was a regular plasma donor.

I used to go to the plasma donating place almost every Friday afternoon. It was a great way to make some fast cash; it only took a little over an hour and they paid $25 every time you donated. Then after I got my $25, I’d walk about 30 yards to the nearest bar and drink lots of $2 Happy Hour pitchers. Was it a good way to spend my plasma money? Probably not. Did I almost pass out from the combination of alcohol and lack of plasma in my blood? Yeah, occasionally. Did I ever lie to any attractive (and naive) girls about the bandage on my arm, saying that it was the result of donating blood for a transfusion for my little brother who had leukemia? All the time.

I miss college.

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A lot of students miss out on tons of government grants and low-interest loans because they never apply. Always fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA. It’s free to fill out plus you could qualify for some free money.

1-2 million families are qualified for the Pell Grant worth up to $4,000 per year but they miss out because they don’t apply for financial aid. Big mistake. Never turn down free money.

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Consolidation loans and home equity loans work like this: Take one of these loans out. Pay all of your different credit card debt and other debt down with the loan. Pay one monthly payment with a lower interest than what you were paying before. Good deal, right?

It’s only a good deal if you budget and watch your money from now on. A common practice of people who do loan consolidation is that they don’t change their spending habits. They run up their credit cards like normal. So now they have their new credit card debt AND their consolidation loan debt.

Bottom line: Change your spending and saving lifestyle before you decide to take a home equity loan or a loan consolidation and you won’t end up in a debt spiral.

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