January 27, 2010

How To Plan For Your Next In-full Auto Insurance Payment

In a tough economy, people are trying to cut expenses in any way they can, but auto insurance is an expense we cannot do without. State laws tell us we must have insurance in order to drive a car, and many states will not even allow you to license an auto without providing proof of insurance. Do you panic when that yearly insurance premium is due? If so, there are strategies to help you plan to pay the full amount without breaking your budget. Some insurance companies offer monthly, quarterly or yearly payments of premiums. However, there is usually a fee that accompanies installment payments, so it is best to pay the auto insurance coverage yearly.

In terms of budgeting, one should always plan ahead in order to be able to pay the full auto insurance premium. As soon as the yearly premium is paid, you should start saving for the next year’s payment. Divide the full amount by 12 to get the monthly amount you will need to save. You may even consider adding a few dollars just in case your auto insurance rate increases over the year. Be diligent about saving this amount by putting it in a savings account. Keep in mind that by putting the fixed amount in your savings account every month, you will be earning a small amount of interest on it. If you were paying your auto insurance on a monthly basis to the company, you would be paying them a fee instead. In essence, you are saving money by doing this.

If the monthly savings plan is not feasible for you, look to an income tax return for the funds. Again, you need to set up a savings account and deposit enough funds to cover your next auto insurance premium. Pay the full amount when it comes due. As soon as you have paid the full amount, go ahead with the idea of budgeting a monthly amount to continue putting in the account. This will help to get ahead for the following year’s insurance premium.

Auto insurance coverage is a necessary part of everyone’s budget, but you can make it easier to pay by planning ahead to pay it in full. You will know that you are prepared to pay the insurance rate when it comes due by simply transferring the money from your savings account to your checking account. Placing that monthly amount into an account to save for an insurance premium may temporarily slightly strap your budget, but it is better than stressing out at the last minute when the full amount is due. You may even consider the interest earned to be a personal bonus!