When Insurance Is Inconvenient
Insurance payments can come on different schedules, rather than monthly. If you pay your mortgage insurance via your mortgage payment, a high mortgage insurance bill won’t surprise you at an inconvenient time. While some forms of insurance can be rolled into other payments, like health insurance paid from your paycheck, other forms of insurance aren’t that simple. Car insurance, in particular, can be monthly or even in four easy installments that cover six months. If you’re trying to figure out how to create a budget, an inconvenient insurance bill can easily blow it.
Plan and Pay Ahead
One way to avoid these types of budget surprises is to pay things ahead of time. Even car insurance can be paid annually, as long as you have the funds. In some cases, it may make sense to borrow the money to pay ahead of time, so that you don’t trigger other types of fees or miss a payment and risk having coverage lapse. If the bill is just too high, seek to lower it by shopping around, so that you can afford to pay it all at once, ahead of time. This can be done annually, as rates should change each year, and you might be able to get a real deal as PMI is dropped or your car note is paid off. One of the best ways to reduce the price of insurance is to go with an affinity group, like an alma mater, that offers it’s members reduced rates.
Pay By Automatically Drafting Your Bank Account
While it’s not perfect, it is super convenient. The problem is logging the payment and knowing when it will be paid. If you’re not paying attention, and have your insurance automatically drafted from your account, you can easily overdraft on a low month. It’s up to you whether you choose to automatically draft your account for insurance needs. It’s a simple way to keep things paid, and on autopilot, so that you never risk losing your coverage due to poor memory.
