Ok, so I’m about to alienate all readers who don’t have kids right now – but hang tight for a second!

If you stick with me here, I think you’ll find some valuable lessons in personal financial planning.

We can all use some guidance when it comes to personal finances and getting a handle on our money.

It just so happens that my daughter’s favorite cartoon character, Dora the Explorer, can be a pretty good personal financial planning guide.

So let’s turn to Dora and find out her 5 things we need to know about personal financial planning!

Personal Financial Planning Tip #1: You Need a Specific Target

For those familiar with the show you’ll know that Dora’s always on an adventure.

She always needs to get somewhere to help someone or make it to a birthday party etc.

Dora always has a specific goal she is trying to reach. 

We need the same thing when it comes to personal financial planning.

If you don’t know what you’re aiming for – whether it’s retirement, opening a Roth IRA, debt-freedom, a new house, college savings or something else – then you’ll never reach your goals!

Question: Do you have specific and targeted goals?

Personal Financial Planning Tip #2 - You Need a Plan

In order to get where she needs to go, Dora enlists the help of Map!  Yeah, a not-so-clever of a name, but hey the target audience of the show is young kids – give ‘em a break!

Anyways, Map comes on to the scene and shows Dora how to get from point A to point B.  He tells her where she needs to go and what to watch out for.

A personal financial plan or a tool like this Credit Card Payoff Calculator will lay out exactly what you need to do and when so that you can get to where you want to go!

Question: Do you have a personal financial plan?

Personal Financial Planning Tip #3 – You Need to Be Prepared

Inevitably in the show, Dora runs across some sort of challenge and she needs to use some tools or items to help. 

But guess what, Dora is prepared!  She always wears her trusty Backpack!

Backpack comes in, sings his little song and then opens up to reveal all kinds of tools at Dora’s disposal to help her stay on track!

We need to be prepared for the “What Ifs” in life. 

We need to have emergency funds, we should really have the proper amount of insurance, and of course, we should really spend some time thinking about things you shouldn’t be caught dead without!

Question: Are you prepared for life’s “What Ifs”?

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Personal Financial Planning Tip #4 – You Need Friends to Help You in Your Journey

Dora’s got lots of friends!  And they are all willing to help her out.

This is extremely important, especially when you are on a long and difficult journey like climbing out of credit card debt!

Any time we’re trying to reach our goals, we’ll be tempted to lose focus or just plain quit! 

This is where accountability and friendship come in to play.  Enlist the help of someone who won’t be afraid to challenge you and keep you accountable to your goals.

If you don’t share your goals with anyone, you are less likely to reach them.  Get by with a little help from your friends!

Question: Do you have people who can help you in the journey?

Personal Financial Planning Tip #5 – Identify and Get Rid of the Swipers!

If you’ve never seen the show, Swiper the Fox always makes an appearance! 

He loves to knock Dora and her friends off track, take something that doesn’t belong to Him or just plain mess up the adventure.

Dora and her friends get rid of Swiper by yelling, “Swiper, no swiping! Swiper, no swiping!” and eventually if they say it soon enough he leaves!

I guarantee you that you WILL have Swipers that come to knock you off track!

It might be in the form of a new outfit calling your name, a new car that is begging you to buy it or it might just be your credit cards that missed being swiped!

Swiper might even be you!!!

Be ready to say, “Swiper, no swiping” to yourself!!

Question: Do you get rid of the temptations that throw you off track?

Readers, what other tips do you have?

What tip has helped you the most in your personal financial planning journey?

Oh great – a post about life insurance – doesn’t he know I’m not interested in reading about life insurance?

Is there anything people hate thinking about, talking about and paying for more than life insurance? 

A necessary evil if you will.

It just feels like a waste – I mean what benefit do you receive from having it?  Abolutely nothing – only your heirs get to see that. 

At least if you need other forms of insurance you can realize something tangible like health or a fixed vehicle or something!

But we all know that we need it – or at the very least, we need to talk about it and come to an informed decision regarding it.

So, when you’re about to make the plunge and start looking at life insurance for the very first time or you are re-evaluating your current situation - answer these four questions before you pay that premium!

1. What’s the purpose of my life insurance

Are you serious?  The purpose of my life insurance?  Isn’t it to pay someone when I die? 

Sort of. 

What I mean by purpose of life insurance is what exactlly are you using it for.  Here’s some examples:

• To provide my spouse with income for life
• To create funds for my children to go to college
• To pay off my mortgage
• To pay estate taxes and minimize the erosion of my estate
• To pay off other debt
• To bury me

As you can see there are multiple purposes for your life insurance and you may have more than one.  

It’s vital to understand why you are buying the life insurance in the first place.

2. How much insurance do I currently have

You might have a million dollars through your group insurance at work and think that you’re good to go.

Wait!  Not so fast – think about it for a second.  If that’s the only insurance you have what about if you lost your job, quit or retired?  What happens to all that insurance?

In most cases it disappears – so do you really have that coverage? 

Yes and no.

You do have coverage, but it’s temporary.  So you need to evaluate how much you have and what kind of insurance you have as well – term, permament or group.

3. How much life insurance do I need

There are countless calculator’s on the web you can use to determine your life insurance needs.  

The amount of insurance you need will vary depending upon what your purpose for the insurance is. 

If you are trying to provide for your spouse for the next 20 years then you’ll probably need more than someone only worried about having enough to bury themselves and pay off some outstanding liabilities.

There’s no hard or fast rule regarding how much you need, but here’s a handy guide from LIFE (Life and Health Insurance Foundation for Education):

4. What kind of life insurance policy should I buy?

Yes, Suze Orman will tell you to only by term insurance.  Others will tell you to only buy permanent (also known as whole life, universal life or variable universal life).

But what kind do you really need?

The answer is it depends.  It depends on the purpose for your insurance and how long you want it to last you.

If you’re concerned about using life insurance for estate planning purposes you probably need something more than term insurance.

If you’re only concerned about protecting your life for 20 years until the kids go off to college then a term product is proably right for you.

Don’t let people tell you that only one type of insurance is right for everyone.  There is no one size fits all!

The bottom line with life insurance

Identify the purpose of the life insurance, do your homework, shop around and do what’s best for your situation.

What about you? What other questions should you ask before you buy life insurance?

December is usually a reflective time of year, wouldn’t you agree?

The end of the year is a chance to look back at our successes and failures throughout the year and also gives an opportunity to look at what we’d like to change.

I like to make New Year’s resolutions as well.

Although I don’t keep them all, it’s fun to look back and see which ones I did keep.

I think it’s important to set goals and make plans – it’s what helps us get and stay on track.

Did you ever wonder what a Personal Finance Blogger might have as their financial resolution?

I have – so I hit the Twitter Streets again to ask this question:

What is your top financial resolution for 2010?

Here’s the responses I received:

As you read through these, click on the Twitter handles and give these folks a follow!

Enemy of Debt ( @EnemyofDebt)

We are really wanting to complete our Fully Funded Emergency Fund of $15,000.

Nothing provides financial security like having an emergency fund in place. This fund is very important to us because having this it will mean that we can move on to two other very important financial goals we have—which will be to fund our retirement with gazelle intensity and fund our children’s college funds. One goal leads to another.

Here’s to a prosperous 2010 for us all!

Out of Your Rut ( @OutofYourRut)

Reducing expenses, building savings and paying off debt. We don’t have much in the way of debt, but even a little is irritating (or worse!)

Bible Money Matters ( @MoneyMatters)

My financial resolution for 2010 is to get my financial life a bit more organized, and to practice what I preach on my blog.  Within the past couple months my wife and I found out that we are expecting our first child, and that has really made me realize that I need to practice what I’ve been writing about when it comes to getting life insurance, setting up investment accounts now that we’ve fully funded our 8 month emergency fund, and putting together a set of instructions for my wife in case I were to die or become incapacitated.  Now that we are no longer going to be a dual income with no kids family, it’s time to get organized and motivated!

Consumerism Commentary ( @Flexo)

Continue doing things I enjoy and enrich my life.

Green Panda Treehouse ( @Green_Panda)

My goal for 2010 is invest at least $3k into my Roth IRA

Debt Free Adventure ( @MattJabs)

My top New Year’s Resolution is to pay off all high interest debt and build my Emergency Fund up to $20,000.  While doing this I also hope to accomplish my move to full-time PF blogger before 12/31/2010.

Miranda Marquit – Freelance PF Writer ( @MMarquit)

Refinance the house. Rates are low and we could [get] a 15 year mortgage for a little more than we are paying now, saving us big $$$!

Get Rich Slowly ( @jdroth)

To be honest, I don’t have a PF resolution for 2010. I’m explicitly NOT setting a financial goal this year.

Everyday Finance ( @EverydayFinance)

My 2010 res is to continue to derive savings from 2010 fixed costs in our family and increase top line via blogging.

Wealth Pilgrim ( @NealFrankle)

Honestly, get my blog to earn a certain income (won’t disclose) so I can justify my time.

Money Funk ( @MoneyFunk)

To surpass snowball plan by $5000 because I am eager to get out of debt and travel the world!

Good Financial Cents ( @JeffRoseCFP)

We’re in the middle of completion of our new home and we’ve seen our emergency fund dip below the 12 month of monthly expenses mark that we like to have.  Our goal will be able to get it back to our comfort zone, in addition I’ll be hoping to sock away as much as we can into my SEP IRA.   I like the idea of having a nice portion in cash and another working for us towards retirement.

Deliver Away Debt ( @DeliverAwayDebt)

Pay off my 2nd mortgage which totals $24,000. I want to pay it off next in my Snowball because I’m paying 12.75% on the dang thing. That is the highest interest rate of all my debts.

I’m going to follow the 75/25 rule (by Matt Jabs). The 75/25 rule says that 75% of all available debt snowball funds will be put toward the debt snowball. The extra 25% will be used to fund (with CASH) other savings goals. I want to double my Emergency Fund to $2,000, Fund a $1,000 vacation fund, and begin my Wife’s new used car fund.

One Money Design ( @OneMoneyDesign)

This coming year is an exciting one for us. We will become debt free except our mortgage by paying off our final car loan. We are already living out how paying off debt can free up additional money to meet financial goals such as snowballing debt and growing an emergency fund. It has also provided extra resources to allow us to give more when we feel called to do so.

The emergency fund has been a difficult area for our family over the past few years. It seems each year something comes up that uses up much of it. We are grateful this system works as without our emergency savings we’d be facing credit card debt. So in general, the next goal will be building the emergency fund more to the point of further protection.

Change Jar Saving ( @ChangeJarSaving)

Pay off the credit cards!  And have no more bills hanging over my head.

Upper Valley Mom ( @UpperValleyMom)

Move to a envelope system and budget that husband and I can both work with, in order to get some traction.

Being Frugal ( @Lynnae)

Pay off my student loan, because that’s the last of my debt, besides the house.

Ducks and Dollars ( @skduck2003)

Pay off 4 loans (1 auto, 3 student) & increase savings in an effort to reach financial freedom!

Financial Highway ( @MoneyHighway)

We are just changing priorities from saving to paying off Student loan so main goal is to reduce student debt (only debt we have) by 40-45%.

Linsey Knerl from Wise Bread  ( @WiseBread)

My top resolution (Linsey Knerl) is to give more in 2010. I feel so blessed, and I would love to see my blessings help others.

SF Personal Finance Examiner ( @UpsideofMoney)

To take my own advice.  For example, I handle my son’s Roth IRA account and I’ve built it the right way from the start; I’ve used textbook-classic investing and he’s up 56% this year. My own Roth account is only up 23%, has a hodgepodge of mutual funds, and needs a good dusting. And of course my son is only 17 with a time horizon of 45 years, and I am looking at retiring in the next ten.  

 Thrifty App ( @ThriftyApp)

Try something frugal each month that I haven’t been able to bring myself to do.  January=handkerchiefs. We’ll see…

Fiscal Fizzle ( @FiscalFizzle)

At the top for 2010 is getting serious about retirement. It’s been on the backburner for too long and I’m losing time.

Credit Goddess ( @CreditGoddess)

Start a home improvement fund. Bought a house in 2009 & want to make some changes.

Foreigners Finance ( @ForeignerFinan)

3 quality posts a week for 52 weeks to prove to myself and my readers I can continue to create solid content.

Steadfast Finances ( @Matt_SF)

I’m hoping to beat the @LendingClub ROI of 9.6%. If I can, I’ll scale up my pilot portfolio.

Centsible Life ( @CentsibleLife)

My top resolution is to continue to increase our earnings every month. More money=out of debt faster!

Small Steps For Big Change ( @SS4BC)

To be debt free? Why? Well shouldn’t that be evident? =)

Rainy Day Saver ( @RainyDaySaver)

To finish paying off our credit card debt and add extra principal payments to the mortgage

Erica.Biz ( @EricaBiz)

My personal finance resolution is to make 6 figures in 2010 selling my products from my blog! I’ll use that money to save for a house.

Personal Finance Notebook ( @patreniaspears)

A goal for 2010 is to fully fund our emergency fund.

Free From Broke ( @FreeFromBroke)

My resolution is to keep looking at my life and see what I can do to improve it everyday.

Arohan’s Investing Life ( @Arohan)

I want to start and grow a new business in 2010 to a level that allows my wife to quit her job and raise our kids.  So I am looking to generate new income stream and improve family time.  This way she can also work part time if she wants. 

I also plan to payoff the only non-mortgage debt we have (personal loan, about 20K).

Kingdom First Mom ( @KingdomFirstMom)

To practice what I preach (use coupons effectively, pay off debt, build savings)

My Money Power ( @myMoneyPower)

My PF Res is to Be Happy.  A positive outlook can make a big impact in your finances. There are studies showing depression leads to spending.

Financial Samurai ( @FinancialSamura)

1) Earn $1 million bucks, 2) Win a minor tournament like the SF Tennis Open, and 3) Meet 36 new people, or 3 a month!

 Money Help For Christians ( @MH4C)

This year are goal to save enough extra money each month so we can pay off our mortgage 12 years early.

What About You?  What is Your Top Financial Resolution for 2010?

I think one of your top resolutions for 2010 should be to Restore Your Money & Renew Your Mind by subscribing FOR FREE to more posts from Redeeming Riches!

I came across an interesting statistic that blew me away the other day: 

After a divorce, a woman’s income decreases on average by 79%, while a man’s increases by 49%.

Think about that for a minute.  How would you respond to a seventy-nine percent decrease in your income?  How would you respond if your income grew by forty-nine percent? 

Unfortunately, divorce is an increasingly common thing in America these days and one that many people are facing. 

For many, managing money may be a new endeavor.  Perhaps one spouse always handled the finances and so creating budgets or balancing checkbooks is something they’ve never done.

This above statistic got me thinking about some ways to effectively manage money when the papers are signed and both parties head home to different living quarters.

1. Review/Revise Goals

This should be probably be one of the first things you do after the divorce. 

When you are ready, sit down and write out your financial goals and revise where necessary. 

This may mean you need to add a few years to your retirement goal, get an investment strategy in place or perhaps you need to make becoming debt-free your number one priority.

At any rate, studies show that writing your goals down increases the liklihood of achieving your goals.

2. Review/Change Beneficiaries

This is one area that often gets over looked. 

In a court of law, a beneficiary designation is a contract.  In spite of your desire for your 401k or life insurance proceeds to go to your kids- if you had your ex-spouse listed on the account, he or she gets the cash in the event of your death!

Most divorcees will want this changed so it’s important to review who is listed and make adjustments as soon as possible.

3. Create a budget, track expenses and save

 How many of you would rather get your wisdom teeth out than prepare a budget or track your expenses?  It’s just not one of those “bucket-list items”, but it’s a necessary thing – especially when things change in dramatic fashion as such in a divorce.

If you’re unsure where to start, I suggest tracking your expenses for a month or two by writing everything in your own expense diary.

If you find your income growing after a divorce – you need to track and deploy those additional dollars towards savings otherwise it’s easy to go out and blow that money.

 4. Seek additional ways to earn income

This is especially important to those included in the statistic above.  You may need to get another job to help with expenses at first. 

Ideally, however, it’d be great to start diversifying your income.  This could include selling your stuff on ebay, turning your hobby into a business, or even blogging to make extra money.

The ideas are endless – the point is that you’ll need to start finding some additional ways to make a little extra cash and help with knocking out debt, paying expenses and saving for retirement.

5. Dont be afraid to ask for help

This might be the most important item in this list.  Why?  Because for many of us, our pride or embarrassment gets in the way of us asking for others to help us. 

Maybe we don’t want to be a charity case or a burden – so it’s easy to not say anything at all even though we might need help with setting up a budget, determining next steps or even needing some financial help.

For the most part, most people want to help – they are just unsure how.  And unless you speak up and mention there are things you need help with – there won’t be many people offering.

A side note and a challenge for us:

One thing this statistic got me thinking about was that although we often hear of stories where the ex-wife takes everything – this apparently is not the norm.

Generally, if kids are invovled, the women take care of them  – this ex-wife now becomes a single mom whose income dropped by almost eighty percent! 

I can’t imagine being faced with that scenario and so I’d like to challenge us to consider the single moms who many are working two or more jobs to make ends meet and are having a tough go of it. 

Perhaps we should be willing to reach out more to extend a helping hand in service.

Friday Finance Round Up is a weekly post that includes interesting articles and blog posts on money found during the week from across the web.

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Study Reveals Churches Response to Economic Conditions – Out of Debt Christian

A recent survey conducted by NationalChristianPoll.com for Christianity Today International’s Your Church Media Group reveals how the recession is impacting churches and how they are handling current economic conditions.

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Car Allowance Rebate System – Cash For Clunkers – Free From Broke

In late June President Obama signed into law the the Car Allowance Rebate System or as it’s also known: Cash for Clunkers.This is a program that encourages people to trace in their cars for more efficient models.  It also helps to stimulate the economy (similar to the first time home buyer tax credit at a time when car sales are lagging.

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 Sowing and Reaping – ChristianPF

A little over a month ago, I wrote about a young couple we know who gave us (sowed) $1000 in obedience to what they felt God was leading them to do. In that article I wrote about how excited we were for them, because we know what the Bible says about sowing and reaping…

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Follow Through on Financial Goals – Debt Free Adventure

If you have ever been coached in most any sport, you have undoubtedly had the term “follow through” beat into your psyche at length.  Whether dealing with sports, house projects, political promises, or finances, follow through is an essential lesson to be applied in all aspects of life.

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Unemployment Survival Guide – CNN Money

There are no two ways about it, being laid off isn’t easy.  Here are some tips to help you maintain your quality of life.

What is Income Protection Insurance a.k.a. Disability Income Insurance

May is National Disability Awareness Month. 

My guess is you didn’t even know there was such a thing. 

To be honest, I didn’t either until a few weeks ago.  It seems like everything is getting its own awareness month these days doesn’t it?

I thought this would be a good time talk about disability income insurance or income protection insurance.

I know, I know, it sounds fascinating!

What is Disability Income Insurance?

Disability insurance, or income protection insurance, is one of the most misunderstood and often overlooked forms of insurance in the marketplace today. 

In its simplest form, it offers income replacement to an individual who is unable to work.

If you were to get sick or hurt for a period of time, disability income insurance would replace a portion of your income. 

Benefits are generally taxable if you have a group policy paid by your employer and typically non-taxable if you own an individual policy.

Who Needs Disability Income Insurance?

The Social Security Administration estimates in their December 31, 2007 fact sheet that seventy percent of the private sector workforce has no long-term disability income insurance.

A person’s ability to earn an income is usually their most important financial asset, so basically anyone who depends on earned income should probably consider this type of insurance.

How Much Disability Income Insurance Do You Need?

That depends on a few things like how much income do you currently earn, how much are your fixed expenses each month and do you have any other disability insurance in place.

Here’s a handy calculator that shows your potential need for insurance.

I Won’t Need Disability Income Insurance

Consider these statistics:
• Someone who is 35 years old has a 50 percent chance of disability for 90 days or more before they turn 65.
• Most people in the U.S. are better prepared financially in case of death (usually with life insurance) than if they get disabled, even though the chances are at least three to five times greater (depending on age) that a disability will occur.
• Upwards of 375,000 Americans become totally disabled every year.
• Approximately one out of seven people who are between the ages 35–65 can expect to become disabled for five years or longer.
• Almost 30 percent of the people who are between the ages 35 and 65 will experience a disability that lasts at least 90 days during their working careers.

Should You Purchase Disability Income Insurance?

The first thing to do is check with your current employer to see if you are covered through work. Secondly, if you do have group coverage, find out if you can increase your coverage.

And lastly, shop around to get a price on individual policies to see if it works into your budget and makes sense for you financially.

Real Life Example

I remember talking to my friend and former coworker Kent Eloe, who said he was so glad he bought disability insurance before he found out he had brain cancer.

Many of us think, “it’ll never happen to me” and that might be true, however, the question that should be asked is “what if it does?”.

See more of Kent’s amazing life story here.

Theological Considerations

Our hope does not lie in any amount of insurance coverage or financial planning.

Our hope lies in the Sovereign Creator of this world, our Father God who cares for and loves his children and promises to provide for their needs.

We must be prudent in our planning, but ultimately we entrust our care to Him.

The financial health of two of the biggest government programs has worsened due to the affects of this recessionary market. The Social Security Administration announced today that Medicare is now paying out more in benefits than it is receiving, and that by 2016 Social Security will be paying out more in benefits than it receives.

Insolvency for Social Security has been revised to 2037, four years sooner than was predicted last year. Medicare is in worse shape with predictions of insolvency by 2017. With unemployment reaching 25 year highs at 8.9%, America has fewer workers paying into Social Security exacerbating the problem.

Timothy Geithner, Treasury Secretary and head of the trustees group said, “the longer we wait to address the long-term solvency of Medicare and Social Security, the sooner those challenges will be upon us and the harder the options will be.”

That is a pretty obvious statement. It is also obvious that we shouldn’t depend on the government for our retirement plans. Let this be a reminder that retirement planning is our responsibility.

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