Tip: Renters Insurance is a Good Deal, Here’s Why

By Lynnette Khalfani-Cox, The Money Coach

Even in a home buyer’s market there are still people who will need to rent, and where there are renters, there should be renters’ insurance.

Renter’s insurance is excellent protection to have. Unfortunately about 7 out of 10 renters — among more than 80 million renters in the U.S. — don’t have this valuable coverage.

The majority of homeowners — about 96% according to an Insurance Research Council poll — have homeowners insurance to cover themselves in the event of theft, fire, or accidents by people on their property. Even if you’re renting out a single-family home, you should still have your own coverage.

Here are three reasons you should have renter’s insurance if you’re renting:

1. It’s affordable. About $12 a month is about average for a policy that gives renters roughly $30,000 in property coverage, and $100,000 in liability coverage.
2. Protect your valuables. Even if you think your only valuables are a computer and your child’s Play Station, have you also considered the cost of replacing all your other stuff, like your clothes, jewelry, TV, furniture, CDs/DVDs, microwave, etc., in the event of theft, a fire, flood or some other mishap? State Farm estimates that it would take about $25,000 to replace all the items found in a typical 2-bedroom apartment. Renter’s insurance would replace all of that if it gets stolen, damaged or destroyed.
3. Reduce your liability if you’re sued. Liability coverage protects you if someone trips, or gets hurt in your apartment. The liability portion also protects you if you have a dog that bites someone else and that person chooses to sue you. So having renter’s insurance can limit your personal liability.

Think $12 a month sounds too steep? Check back with this blog in the coming days for tips on how to lower your insurance premiums.

Earn Extra Cash to Pad Your Emergency Fund

By Lynnette Khalfani-Cox, The Money Coach

Do you have enough socked away to cover your bills should you get slipped a pink slip? Typically I would say you should have enough savings to cover three times your monthly living expenses, but given this economy and the skyrocketing unemployment rate, six or nine months worth of savings is more ideal.

Here are three ways to earn some much-needed extra cash to help pad your savings.

Get a second job. I realize that most people already work really hard, and might even be covering for recently laid-off co-workers, but if you can fathom the idea, consider getting a second job or part-time work, even if just for three months. This may seem like a burden, but trust me, the time to build your emergency savings fund is before you actually need to tap it.

Start a part-time enterprise. Whether you turn a hobby into a cash-making business, sell new or used products online, or stuff envelopes for another business, the key is for it to be a no-cost or low-cost venture that can be operated exclusively from the privacy of your own home. Why these characteristics? For starters, you don’t have the money to buy tons of products. You also don’t want to have to hire anybody or lease space. You want to keep all the money you earn, right?

Squeeze money from your residence. Whether you rent or own, getting a roommate or housemate is another way to generate income. If you can tolerate having an extra person around, you’ll likely find takers willing to lease out a spare bedroom or space in your attic or basement, especially given the high rate of people being put out of their homes these days due to foreclosure or inability to get a mortgage for their own place. However, before forging ahead if you’re a renter, be sure you’re not violating any clauses in your rental contract by letting someone else live with you.

— Adapted from “Day 22” chapter of my book, Zero Debt: The Ultimate Guide to Financial Freedom.