09-23-2009, 12:06 PM
PrePaid Services Are Not Cost Effective Choices For Most
Interesting,
Yes, I researched this as well, and as it turned out, it was a program doing for you what I was already doing for years. Simply put, if you need a plan to administer your savings for you, then by all means, this strategy does work, but I choose not to pay someone else to do what anyone can easily do for themselves.
Simply put, you change your deductible from the typical $500. to $1000. which will lower your premium on car insurance. Depending on the type of car and value of it, this can add up to be hundreds per year. If you were to do this yourself, and put the savings into a automatic savings account, or something similar to the old Xmas Clubs which is an automated savings plan, then why do you need to pay someone else for same thing you can do yourself?
The plan works for most people if you save the money your premium was reduced by. Say you are saving $50. a month, you put that money into a savings account every month and you have $600. saved, plus the small interest you earn, now calculate the average time a person may have an accident, which varies by region, but is rarely more than one in ten years, now you can calculate your savings. If you take the ten year times your $600. savings a year, you now have an insurance savings account with over $6,000. in it plus interest which is compounding.
Now lets say you do have an accident which is your fault, and you have a $1000. deductible, so you take a $1000. from your savings plan and let it ride, soon enough you will have enough to pay for a car in cash, but you have to have decipline to save. Even if you have an older car where change in deductible may only save you $25. per month, it does not take long to save up the difference of $500. you will have to pay if you have an accident that is your fault, so this plan can easily be managed personally, not through an MLM company as I see it.
Success to all, Mike
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