disability insurance

5 Things Every Single Person Needs to Do With Their Money

Denise Hill — Mon, 12 Mar 2018 10:00:06 +0000

The number of Americans who wait to get married — or never get hitched — is growing. In fact, for the first time in history, the number of unmarried Americans almost equals those who are married. The U.S. Census Bureau reports that there were 110 million unmarried adults (age 18 and older) in 2016, which is 45 percent of all U.S. residents over the age of 18.

Living a Sex in the City lifestyle may be alluring, but it also comes with hidden financial pitfalls. This is especially true for singles who have never been married. While divorcees and widows have distinct challenges, there are resources and services out there to assist them through their transition. However, if you are someone who has never been married, you're pretty much on your own.

With that in mind, we've compiled a list of the top things that every single person should do with their finances.

1. Make saving money your top priority

As a single person, you only have one income. You have to pay for living expenses and handle any emergency that arises on your own, so having a true emergency fund is paramount.

Financial experts advise that singles have as much as a year's worth of living expenses put away in lieu of the traditional three to six months' worth. A larger emergency fund will help sustain you for longer during lean times or a job loss. Married couples have the benefit of sharing expenses and may have a second income to help them through difficult times. As a single person, you don't have that luxury.

It is also highly advisable that you begin saving for retirement now. Look for ways to maximize your contributions. Take advantage of things like a company match, and contribute 10 to 15 percent of your pay to your employer's 401(k) or an IRA. Educate yourself on the different types of investments and pay particular attention to index funds, which usually have low fees. (See also: 5 Actions Women Can Take Right Now to Get Their Retirement On Track)

2. Stick to a zero-based budget

As a single, your budget is your financial guide and road map. It undergirds your financial success.

It's a good idea to use a zero-based budget as your cash flow plan. A zero-based budget makes you account for every single dollar you spend before you spend it. It makes you accountable for how you choose to allocate your funds and makes you cognizant of where all your money is going. If you earn $3,000 per month, your monthly budget — including every cent you spend, save, or invest — should be accounted for and should total $3,000.

It's also a good idea to institute a routine system to track your expenses. Every few months, keep an extra keen eye on the dollars that go in and out. This will help you gauge and adjust how much you are spending on things like gas, eating out, groceries, and clothes. It will also show you where you can cut back during lean times or if you want to build a fund for a specific purpose such as a vacation or a new vehicle.

3. Protect your credit and avoid debt

Protecting your credit is very important no matter who you are. When it comes to using credit, make sure you use it responsibly. If you use credit cards, keep your balances low enough that you can pay them in full at the end of each month. You should also strive to keep your credit utilization ratio below the recommended 30 percent threshold. (See also: The Fastest Method to Eliminate Credit Card Debt)

If you do have debt — including the dreaded student loans — prioritize paying it off as soon as possible. And once you've gotten rid of it, only use additional financing for large purchases such as a home or a car.

Another part of protecting your credit is routinely reviewing and correcting any mistakes on your credit report. You're allowed one free copy of your credit report every 12 months from each of the three nationwide credit bureaus: Equifax, Experian, and TransUnion. You can obtain these reports from AnnualCreditReport.com. You can also use free resources such as Credit Karma to check your credit score and monitor your information to ensure it's accurate and that your identity hasn't been stolen or misused. (See also: How to Read a Credit Report)

4. Get disability insurance

Disability insurance is critical for all singles, but especially for single women. A 2012 study from the American College showed that women were more likely than men to have a disability that prevents them from working.

The study also found that women were more vulnerable to experiencing tremendous financial distress if they became unable to work due to a disability. Nearly 50 percent of the women surveyed categorized experiencing a disability as "somewhat devastating" in regards to their family's finances. And 22 percent believed that their savings would last less than a month if they were unable to work.

Regardless of your gender, if you are single and employed, your entire source of income could be in jeopardy if you suddenly become disabled. It is imperative that you have adequate disability insurance (especially if you are a single parent).

If your employer offers both short- and long-term disability, take both. Choosing to forgo disability insurance to save a few dollars a month isn't a gamble worth taking. Sure, you are healthy today, but what if …? Insurance helps you plan for and protect against life's what-ifs. (See also: 4 Things You Need to Know About Disability Insurance)

5. Get an accountability buddy

Discipline is easier when you use the buddy system and when you are required to account for your actions and decisions. Married couples often rely on each other for this, but you can rely on the advice and motivation of a trusted friend or family member. Making good financial decisions is tough. Having someone to help you weigh your options will save you time, energy, and money.

When choosing a financial accountability buddy, choose someone who is financially astute, knows you well, is frugal, and has your best interests at heart. Get someone you know will be brutally honest with you and will make you talk through financial decisions. It should be someone with whom you are comfortable sharing financial intimacy.

This may not be your best friend or the one you go to when your heart is broken. This person should be practical, pragmatic, and analytical. He or she should make decisions from the head, not the heart.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Ways Retirement Planning Changes When You're Single

Emily Guy Birken — Fri, 14 Jul 2017 09:01:05 +0000

It can sometimes feel like everything is created with couples in mind — including retirement planning. When every article, tip, and suggestion for retirement starts with the assumption that you are married, you might be forgiven for assuming that retiring solo is just a matter of cutting retirement planning advice in half.

But there are specific challenges and concerns (not to mention benefits!) that single retirees need to prepare for before they hang up their careers. Here are seven ways that preparing for retirement is different for singles.

1. You need to have adequate disability insurance

Relying on no one but yourself can feel pretty liberating. Not only do you answer to no one but yourself, but you also get to enjoy the fruits of your own labor without having to compromise.

The downside to this, however, is figuring how you will protect yourself in case your income runs dry. While anyone who relies on income from their job should carry adequate disability insurance, this is even more important for single workers who may not have another safety net to catch them if a disability makes it impossible to work. You need to protect yourself, your income, and your assets from the possibility you may be unable to work, even before you start the nitty-gritty of retirement planning.

Even if you have disability insurance through work, that may not be adequate to protect you from a loss of income. Make sure you know exactly how much your work insurance covers and for how long, so that you are not left without an income if it's not enough. Also, don't assume that you are immune to potential disabilities just because the most strenuous thing you do at work is operate the copy machine. Illness is behind the majority of long-term absences from work — and anyone can get sick at any time.

2. Prepare for your health care needs

Health care costs are a major concern for all retirees, since this is one aspect of your retirement budget that you may not have control over. According to a 2016 Fidelity study, a 65-year-old couple retiring in 2016 would need $260,000 for health care to cover their medical and health care needs for the rest of their lives.

That dollar figure is frightening no matter your marital status, and it's important that single people recognize that their costs may be higher than just half of a couple's health care costs. That's because many married couples can help each other to remain independent in ways that single retirees would need to pay for. For instance, you may need to pay for someone to help you at home or for entry into a retirement community sooner than a married couple would need those things.

While long-term care insurance has often been touted as a method of mitigating these expenses for both married and single retirees, the cost of this kind of insurance has become prohibitive. To prepare for the possibility of bad health in retirement, singles should also explore creative solutions to long-term health issues. For instance, taking in a rent-free roommate who helps with daily tasks is not only money-saving, but also offers social support. Planning ahead for potential solutions to health and mobility issues can provide you with some imaginative solutions that money can't buy.

3. Assign a power of attorney

It's easy to assume that you can skip the whole issue of legal planning if you are single and childless, but that's not necessarily true. For instance, do you know who will take care of your health care or financial decisions if you should become incapacitated? You need to assign a power of attorney to make sure that your wishes are followed if you cannot make your own decisions.

Your power of attorney also needs to know where to find your important papers and should be kept apprised of any changes in your life or directives. This is the person who will pay your bills and handle your advanced directive if you fall ill. You can either pick someone in your life whom you trust, or hire a professional whom you trust to fill that role.

4. Invest in tax-deferred retirement vehicles during your career

Single workers miss out on a number of tax breaks that are offered to married couples. According to Jane Hodges writing for The Wall Street Journal, "Without child tax credits, a spouse exemption, and no one with whom to realize the benefits of filing jointly, singles can take a pretty big tax punch during peak earning years."

For this reason, single workers have a particular need to invest in tax-advantaged retirement vehicles, such as 401(k) and traditional IRA accounts. These vehicles allow you to make pretax contributions, which lowers your taxable income while also helping you prepare financially for retirement.

5. Consider rolling over into a Roth IRA before age 70½

Of course, Uncle Sam will still want his cut of the income you put in tax-deferred retirement accounts, which can cause a nasty tax surprise for singles post-retirement. That's because withdrawals from tax-deferred retirement accounts are taxed as ordinary income, and single retirees still do not have access to the tax breaks offered to married couples.

This can become a serious problem for some single retirees as of age 70½ because of the required minimum distributions on tax-deferred accounts. Traditional IRAs and 401(k)s require that retirees begin withdrawing a minimum distribution (based on a percentage of total assets) at age 70½, which means you might be facing a surprisingly high tax bracket upon reaching age 70½. You may also be forced to take more money from your accounts than you want or need because of the required minimum distribution.

To protect yourself from this potentially painful tax bite, consider rolling over a portion of your assets from tax-deferred funds to a Roth IRA account before age 70½. Since Roth accounts are funded with after-tax dollars, you will have to pay ordinary income tax on your rollover. However, this will allow you to decide when you will pay those taxes and give you more freedom to keep your money invested if you don't need it.

6. Hold off on Social Security for as long as you can

Options for optimizing Social Security benefits are much simpler for singles. Basically, the only way to get a higher monthly benefit if you are single is to wait. The longer you can wait to receive your benefits between age 62 (the earliest you can take benefits) and 70 (when the benefits stop growing), the more money you will see with every monthly check. Even if you cannot wait until age 70, or your full retirement age (currently age 66), know that each month you delay taking your Social Security retirement benefits means a little more money in your checks.

It's also important to remember that the federal government does not necessarily define single the same way you do. If you are divorced but were married for at least 10 years, then you are eligible for spousal benefits based on your ex's income record. However, you will collect your spousal benefits concurrently with your retirement benefits, so you will only see an increased benefit if your ex-spouse made a lot more money than you did.

7. Embrace the opportunities

While the IRS and Social Security Administration may both make marriage look like the better option — at least financially — it's important for singles to remember how many more opportunities they have available to them than do married couples. That's because a footloose and fancy-free retiree has far fewer obstacles to retirement than does a married couple.

For instance, retiring abroad can be a very economical (not to mention fun) choice, and it is much easier for a single retiree to pull up roots than it is for a couple. Similarly, traveling in retirement can be much cheaper for one, since you do not have to compromise on where you are willing to save money.

Single retirees can also explore alternative living options, like living with several friends — there's an excellent reason why all the Golden Girls were single, after all — or taking in a younger boarder or roommate, or even moving to a cheaper state. Making these decisions solo means you can find the living situation or opportunity that best fits your needs, wants, and temperament.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Financial IQ Test: How Healthy Is Your Disability Insurance?

Nora Dunn — Sat, 27 Mar 2010 09:00:07 +0000

Disability Insurance (and the integrity of your own coverage and how it suits your needs) is serious business; One in three people are disabled during their working lives, and those disabled for more than two months have an average disability length of two and a half years. Can you cover your expenses if you can’t work for that long?

Following is a Financial IQ Test to help you determine how healthy your disability insurance policy is. Simply look at each statement, and answer it with a YES, NO, or NOT SURE. Keep track of your answers, and we'll see how you score at the end. Then, check out the resource articles below to increase your knowledge base.

Financial IQ Test: How Healthy Is Your Disability Insurance?

Disability Insurance Lingo

I understand the difference between the “any occupation,” “regular occupation,” and “own occupation” definitions of occupational coverage.

I understand the difference between Short-Term Disability and Long-Term Disability plans.

I understand some of the inherent pitfalls of employer disability insurance, and have weighed out the benefits and drawbacks.

I know that pregnancy-related disabilities are almost never covered.

I know what the exclusions are on my disability insurance policy.

Best Value

I have minimized my premiums by selecting an appropriate waiting period, benefit period, and benefit amount.

I comparison shopped for disability insurance.

I checked with my local industry association to see if they offer discounted disability insurance plans.

I decline coverage offered by telemarketers from my credit card company.

Policy Structure

I have considered a waiver of premium rider, to reduce my expenses in the event of a disability.

I pay for my disability insurance premiums with after-tax dollars only.

I have a cost of living adjustment on my policy which indexes my benefit amount to the rate of inflation.

My policy is non-cancelable (as in the insurance company can’t cancel the policy; I can if I choose to).

Due Diligence

I have estimated what my monthly expenses will be (aside from medical expenses) if I am disabled.

I know how long I can live without an income, and have structured my disability insurance policy to start payments before I run out of money.

I considered the insurance company’s financial ratings before buying a policy with them.

I am aware of (and take advantage of) the “free look” period once I get my policy, to read it through carefully and ensure it reflects my needs.

I have looked into Long Term Care or Critical Illness insurance as possible alternatives or complements to a disability insurance policy.

Scoring

Did you keep track of how many times you answered YES, NO, and NOT SURE? Great! Give yourself the following points for each answer:

YES = 4 points

NO = 0 points

NOT SURE = 2 points

Analysis

0-24: Don’t Go Play with Traffic

Did you know that the biggest asset you have in life is your income – and your ability to keep generating it? If you haven’t looked at disability insurance, maybe you should. Some even have features like “Return of Premium” riders that give you your money back at the end of a term if you don’t make a claim. It’s like insurance…for your insurance!

25-48: Covered…but how well?

You’ve taken some time to find out what you need to know about Disability Insurance, but you may not have covered all your bases. Look into anything in the questionnaire that you didn’t quite understand, and you may find a way to save money, or better protect your needs.

49-72: Sorted

You’re at the top of the curve – congratulations! This means you probably have done your due diligence, research, and made the disability insurance decisions that are best for you. (Either that or you lied on the test)! Have a peek at some of the articles below to broaden your knowledge or fill in any of the gaps from the test.

Disability Insurance Articles to Increase Your Score

Disability Insurance: Payments and Pitfalls

MIB: The Big Brother for Insurance Companies

Long Term Care Insurance for Wise Bloggers

Critical Illness Insurance for Wise Bloggers

Credit Card Insurance? No Thanks

Other Financial IQ Tests on Wise Bread

FINANCIAL IQ Test: How Healthy is your Debt Management?

FINANCIAL IQ Test: How Healthy are your Bank Accounts?

FINANCIAL IQ Test: How Healthy is your Budget?

FINANCIAL IQ Test: How Healthy is your Health Care Plan?

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Disability Insurance: Payments and Pitfalls

Nora Dunn — Fri, 07 Dec 2007 02:10:51 +0000

A massage therapist hurts their hand in a silly accident playing volleyball. For most of us, a broken finger or torn ligament in our hand is a serious inconvenience, but not an insurmountable one. For the massage therapist, it is their career.

Until that therapist’s hand is better, they are considered totally disabled. If they don’t have insurance, their only option is to find another job until their hand is in good enough shape to return to massage therapy, which could take many months or even years. Meanwhile, the therapist can’t devote the time necessary to find a replacement for their clients (because they are working at another possibly lower paying job), and they may lose their client base and career in so doing.

There is another way.

Disability Insurance (DI) is yet another tool in the arsenal of insurance products that may be a life-saver for some people, but that also can unveil some bitter surprises at the worst times. Let’s look at the facts:

Three Definitions of Occupation

All disability insurance policies will operate under one of three different definitions of occupation which determine the level of coverage you receive:

Any Occupation

This is the least expensive (and of course the least comprehensive) form of coverage you can have. It states that the insurance company will pay out disability benefits if you cannot perform “ANY occupation” for which you are reasonably skilled, trained, or capable of being trained for.

So although you are a massage therapist and are paralyzed from the neck down, if the insurance company thinks you could sell pencils over the phone, you are out of luck for getting any benefits. (This is an exaggeration of sorts, but you may be surprised at how close to the mark it is).

Regular Occupation

The insurance company will pay benefits if you are unable to perform the duties of your “regular occupation”. So as a massage therapist, you will receive disability benefits if you can’t perform the job of a massage therapist. The catch is, they’ll fight your claim if you can’t attend to your own clientele in the clinic you work in (because of stairs, or a specialized kind of massage therapy), but you can still work within the field of massage therapy – just somewhere else or outside of your specific area of expertise.

However having said that, this is the most common form of insurance people purchase.

Own Occupation

This is the crème-de-la-crème of definitions of occupation, and is only usually purchased by very specialized (and high-income) medical professionals and executives. It is rarely if ever part of a workplace group disability plan.

It states that if you are unable to perform the duties of your “own occupation”, you will receive benefits. So if a specialized doctor can’t attend to their own patients in their own clinic, they will receive benefits. (Never mind if the doctor could perform medical services elsewhere or in a different area of specialty).

Two kinds of Disability Insurance

Short Term Disability (STD)

STD is typically only used as a rich benefit by workplaces, as it is cost-prohibitive for individuals and can often be circumvented with proper emergency fund planning. It provides for a replacement of income if you are disabled starting as early as three days after the disability occurs, and lasting up to six months (usually 90 days though).

Some workplaces will provide short term disability coverage, but not through an insurance company. Instead they will pay your salary out of pocket until the long term disability coverage kicks in, as they see it as being less expensive overall than paying the pricey premiums for STD.

Long Term Disability (LTD)

This is the most common form of insurance (both within workplaces and for individuals requiring coverage). The average policy has a 90 day waiting period, and benefit periods ranging from two years to age 65.

Important Terminology

Waiting Period

Sometimes referred to as the qualifying period or elimination period, this is the amount of time you have to wait between when the disability occurred and when you will start to receive payments from the insurance company. The longer the waiting period is, the less expensive your premiums will be. (The flip side being of course that you have to foot your own expenses for that length of time).

The standard waiting period for Long Term Disability is 90 days, but can be as long as 180 days or as short as 30 days. Short Term Disability can have waiting periods as short as just a few days.

Benefit Period

Although this goes by a few different names as well, it refers to the length of time disability payments will continue once they start. If you have a two-year benefit period with a 90 day waiting period, then you will receive two full years of payments starting 90 days after you became disabled. It is worth noting that payments will stop as soon as you are deemed able to resume your work, even if the benefit period has not yet expired.

Benefit Amount

This is the amount of money that is paid each month as disability income. There are regulations around how big the benefit amount can be (usually a maximum of 70% of your gross salary), since insurance companies don’t want to fully replace your pre-disability after-tax income. The rationale is that if your cash flow is fully replaced while disabled, you don’t have much incentive to get better and off the DI cheques.

Premiums

This is the monthly fee you pay for your insurance. The shorter the waiting period, the more you pay. The longer the benefit period, the more you pay. The higher the benefit amount, the more you pay. The older you are, the more you have a volatile family medical history, or a volatile personal medical history, the more you pay.

Some policies lock in your premium rates for life based on your age, health, and medical history at the time of application. Other policies will rate the premiums, increasing them every few years (and within this realm some will guarantee what your rate increases will look like while others retain the right to increase premium rates by any amount and at any time).

Perilous Pitfalls

Taxation of Premiums and Benefits

In Canada (and I believe in the U.S. too), how you pay your premiums affects how the benefits are taxed. This is especially important, because if your DI benefit payments are taxable and are only 70% of your gross salary to begin with, you will be lucky to end up with half of what you used to bring home after-tax to live on (and with possible increased medical expenses to boot).

Basically if you deduct your DI premiums from your taxes (which those who are self-employed are entitled to do as a cost of doing business), your benefit amount will be taxable. If you instead use after-tax dollars to pay for your premiums, then the DI benefit amount is non-taxable.

Hence, my advice is almost categorically to ensure that you do not deduct your premiums, and if participating in a workplace plan ensure your employer is not paying for the premiums and instead is deducting them from your net pay. A little short term premium pain will result in long term survival if you become disabled and dependant on the benefits being tax-free.

Making Claims

Although you may have a legitimate disability claim and a waiting period of a few weeks, you may be surprised to discover that the cheques aren’t flowing like they should at the end of your waiting period.

In order for your DI payments to start, the insurance company needs to make darn sure that your claim is legit. So they will order third party doctor’s reports, additional tests, or other forms of clarification to ensure they are really on the hook. This can take time, and often surpasses the initial waiting period. Rest assured that once approved, payments will be retroactive, but it can be a terribly sore bone of contention for those in need of benefit payments.

A Note About Group Disability Plans

Many people rest well at night knowing that they have disability insurance coverage through work. What they don’t know is that they might only have an LTD plan, with a waiting period of 6 months, a benefit period of two years, “any occupation” as their definition of coverage, and their premiums are fully paid for by their employer and not taxed. This means that the employee is on the hook out of pocket for 6 months after the disability occurs, they have to be severely disabled to even qualify under the “any occupation” definition, and even if they do qualify their benefit amount will be fully taxed such that they will be lucky to see even half of what their previous take-home pay was.

Or, work plans will often cover under the “regular occupation” definition for the first two years, then switch to “any occupation” until age 65. People take comfort in thinking that they have coverage to age 65, but realize sadly that after two years they are being denied coverage because they are reasonably skilled or trainable for another job under the “any occupation” definition. It is worth noting that statically speaking, the average length of a long-term disability is longer than two years.

Do I think that people need disability insurance? Absolutely I do. But I also think that people who have coverage and think they’re golden should carefully examine their policies to ensure they don’t get caught in the typical DI pitfalls and end up penniless (and bitter with insurance companies) when they are in critical times of need.

If you want to re-examine your policy for cost-effectiveness, check out this article with a tool to help you potentially save a few extra bucks.

Disclosure: I have no affiliation with any insurance companies or vested interest in disability insurance.

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Credit Card Insurance? No Thanks.

Nora Dunn — Mon, 22 Oct 2007 22:46:28 +0000

So your credit card company just called offering you balance protection insurance against job loss, disability, life, or critical illness. The cost will be just pennies, calculated monthly based on your outstanding balance.

Do you take it?

The question is: have you performed an insurance needs analysis, or will you just make the decision to take the insurance based on impulse and instinct?

There are typically four different types of credit card insurance:

Involuntary Job Loss: This pays your monthly minimum payment for a specified period of time after you lose your job through downsizing or layoffs.
Disability: Like above, your monthly minimum payment is covered for a specified time period upon becoming disabled and unable to work.
Critical Illness: Similar to above.
Life or AD&D (Accidental Death & Dismemberment): If you die, your entire credit card balance will be paid.

The cost may initially seem small at between $0.75 and $1.50 per $100 of outstanding credit card balance each month, but in the spirit of being frugal, is that money wisely spent?

Consider the fact that with the exception of credit life protection, this insurance doesn't actually pay off your debt. It simply makes the minimum payments on your outstanding balance for the term of the contract. In fact, depending on the credit card and interest charges, you may sometimes find that the balance at the end of the contract is actually higher than when the claim occurred due to compounding interest.

Are those minimum payments something that would cripple you financially in the event of an illness or job loss? The answer will be different for everybody - this is just food for thought.

Similar to individual Critical Illness, Disability, or Life Insurance policies, there are a few things that bear consideration in order to make a sound decision:

What are the terms of the policy? (For example, what are the specific definitions under which the insurance company will pay)?
What coverage do you need? If you lose that income or become ill, will minimum payments on your credit cards be of benefit to you, or do you have other funds that will suit the purpose?
What coverage to you already have? There is no point in duplicating your insurance coverage if you already have a CI policy in place.
In the case of job loss insurance, what are the exact terms? You may be surprised at the restrictions of this initially appealing option.
Is it cost effective? As a case study, let's examine the life insurance as an example. On a $10,000 credit card balance, at $0.80 per $100 of outstanding balance, your monthly charge would be approximately $80/month. For $80/month, a 35year old non-smoking female in good health can purchase upwards of $500,000 of Term Life Insurance.
Can you cancel the policy, and under what terms? If you do decide to take it, make sure you keep all your documentation together so cancelling it when the time comes is easy.
Are you insurable? Many balance protection policies don't require any evidence of insurability to qualify. If you have medical issues that make you a higher risk such that individual policies would either be cost-prohibitive or unavailable to you, then maybe this is just the protection you need.

On the flip side, one type of credit card insurance that you may not realize you might automatically have is travel insurance. Many credit cards feature automatic flight and travel coverage if you pay for a trip using that card. In fact, before you go out and purchase travel insurance, it bears calling your credit card company to find out the specific terms of their coverage. You may find that you can save a few extra bucks by not having to go out and get extra travel coverage!

As with all insurance policies, take a good hard look at what you need, what you can afford, and whether the "easy option" being offered to you over the phone is going to be easy in the long run.

This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: