Suppose you had purchased term insurance when you were just start- ing out in life to help protect your growing family. At the time, term insurance may have offered the flexibility to help meet your family’s immediate needs at an affordable price. Indeed, the initial low cost and relatively high death benefits of term insurance are often its most attractive features. However, as your children grow and you become more financially successful, your concerns may shift toward strategies that can help maximize savings for retirement, fund a child’s college education, or do both. Concerns about the financial security of your surviving spouse and the resources that may be needed to pay any estate taxes owed at your death will also factor into your long-term plans.

   Although term insurance premiums are relatively low when a person is young, premiums can substantially increase with age. In some cases, the premiums may remain level, but either the death benefit decreases yearly or a significant premium increase is eventually experienced. Thus, over time, you may become interested in converting your term policy to a permanent one.

• Provided that premiums are paid on time, benefits will never decrease. Also, premiums will never increase and cannot be canceled due to any health changes that you may experience over the years.
  
  
• With time, permanent policies accumulate cash values. As the values grow, the insured will have the opportunity to withdraw money from the policy. These loans are tax free and can be used in a variety of ways, such as supplementing retirement income, helping younger generations with college expenses, contributing to the purchase of a second home, or assisting with any other purpose. Loans do not have to be repaid, but if they are not, they will decrease the value of the policy’s death benefit.
  
  
• Some permanent policies offer non-guaranteed dividend payouts. Such payouts occur when the insuring companies’ earnings exceed original projections. Dividends have a wide range of uses. They can be reinvested into the policy to accumulate cash values, taken as cash payouts, or used to fund policy premiums.
  
  
• Guaranteed purchase options are another feature that some permanent policies will provide. These options allow the insured to purchase additional amounts of coverage without a medical exam.
  
  
• Should the insured decide to cancel the policy, he or she will be guaranteed to receive the full amount of the cash values that accumulated during the life of the policy.

   The conversion privilege available in most term policies offers those who cannot initially afford permanent insurance a great opportunity to convert at a later date. Some term policies may offer a conversion credit that makes converting even more economical. Another particular advantage of converting from term to permanent insurance, rather than purchasing a new permanent policy, is that there is no need for medical or financial requalification.

   While this approach may not be for everyone, it is always wise to review all your insurance options. Therefore, you may wish to consult your tax professional for advice regarding your particular situation.

It may be difficult for you to convince your teenage children to actively par- ticipate in their financial futures, but if you can persuade your youngsters to contribute at least part of their baby-sitting or after-school job money into a Roth Individual Retirement Account (IRA), they may thank you later.

    Although it is a retirement account, anyone with earned income below $116,000 for single filers and $169,000 for joint filers in 2008 can open a Roth IRA. Contributions are nondeductible, but account earnings and qualifying distributions accumulate tax free. Because children seldom make enough to owe income tax, children are usually better off with a Roth IRA instead of a tax-deferred traditional IRA. For 2008, your child can contribute $5,000 (or earned income, whichever is less) to a Roth IRA. Starting in 2009, the IRS will index contribution limits annually for inflation.

   Saving for retirement early can generate substantial results. Suppose your 15-year-old daughter used $1,000 to purchase a Roth IRA. If she makes no additional contributions and the funds grow at 8% annually, she will have more than $50,000 to withdraw tax free at age 65. Or suppose your son opens a Roth IRA when he is 15 years old and contributes $2,000 for 10 years. The estimated value of his tax-free fund balance at age 65 will exceed $700,000, if the annual growth rate is 8%.*

   A Roth IRA offers the greatest growth potential if the account is left untouched until the holder reaches the age of 59½. At that age, the holder can withdraw earnings tax free, provided he or she has owned the account for five years. Withdrawals made prior to age 59½ maybe subject to a 10% federal income tax penalty, unless certain qualified exceptions apply. For example, the IRS permits penalty-free early withdrawals to pay for education or to help with a first-time home purchase.

   Before you rush to open a Roth IRA for your child, bear in mind that you cannot stop your child from withdrawing money from the account whenever he or she wants after the child reaches the age of majority—18 in most states. If you are uncertain about your child’s ability to handle money, opening an account in his or her name may not be the best choice.

   You should also be aware that only taxable compensation income can be sheltered tax free in a Roth IRA. In general, paying your children for doing chores around the house does not qualify as compensation income, as this is an intrafamily transaction not usually reported to the IRS. If you own your own business, you are permitted to hire your minor children to do certain jobs. Provided you pay your children a fair market wage for the services performed, their earnings would be considered compensation income and could be invested in a Roth IRA.

   It is essential to keep careful records of how the money placed in a Roth IRA was earned, even if a teenager’s working arrangements were informal (e.g., babysitting or lawn mowing for neighbors) and he or she did not earn enough to owe income tax. Severe penalties could apply if the IRS determines the funds contributed to a Roth IRA were not compensation income.

It is essential to keep careful records of how the money placed in a Roth IRA was earned, even if a teenager’s working arrangements were informal (e.g., babysitting or lawn mowing for neighbors) and he or she did not earn enough to owe income tax. Severe penalties could apply if the IRS determines the funds contributed to a Roth IRA were not compensation income.

   The good news is that, if your teenager goes out and blows his paychecks on a new cell phone and skateboard, all is not lost. If, for example, your son earned $2,500 over the course of the summer but spent the money, you could still contribute the amount equivalent to his taxable earnings into a Roth IRA on his behalf, thereby helping to ensure he has a little something set aside
when he retires and has long forgotten how to skateboard.

*The hypothetical examples are for illustrative purposes only. They are not intended to reflect an actual security’s performance. Investments involve risk and may result in a profit or a loss. Seeking higher rates of return involves higher risks.

To manage debt prop- erly, it’s important to distinguish between “good debt” and “bad debt.” From a purely financial perspective, good debt refers to borrowing to purchase assets that are likely to appreciate in value, such as a home or a business. Good debt may become even “better” if an individual is able to itemize certain repayments (e.g., home mortgage interest) on his or her tax return and, as a result, qualify for certain tax deductions.

   Conversely, bad debt refers to borrowing for a consumable, such as a vacation, or for an asset that is likely to depreciate in value, such as an automobile. Today, bad debt may frequently become even “worse,” since interest on personal loans and credit card debt is no longer tax deductible.

When you sell a home by your- self, there are more tasks ahead of you than just putting up a curbside sign and waiting for buyers to come to your door with money in hand. However, once you do a little “homework” and have all the facts, it may be easier to decide on selling your home yourself or using a broker.

   Sellers, who are emotionally tied to their homes, often price them too high. It can be helpful to do a comparative study and match your home against similar homes in your neighborhood or town. If houses are not selling quickly, you may have to set the price a few thousand dollars lower than you originally intended. You might want to consider hiring an appraiser to get an idea of an appropriate selling price.

   All too often, owners skimp on advertising. In addition to the “For Sale” sign in your front yard, post others where legally allowed. Include a telephone number and show your property by appointment only. Compile a brochure or fact sheet listing the asking price, lot size, individual rooms and dimensions, heating and cooling systems (with monthly utility bills for the last year), appliances or other fixtures included, present financing, taxes, and any unusual or particularly attractive features. The Internet can also be a useful tool when selling your home. People who may be considering relocating to your city or town could view a picture and fact sheet, which could spark their interest.

   It may be wise to screen potential buyers. If they seem interested, ask how much of a down payment they can make. If you are getting close to a deal, you may want to ask the buyer to supply you with a financial statement from a bank or mortgage lender. A serious buyer most likely will be happy to provide the information requested. You may even want to ask buyers if they have obtained a “pre-approval” or “pre-qualification” letter from a bank or mortgage company, so that you may be certain the funds they are offering for your house would be available for them to borrow.

   If you need assistance, “homeowners service agencies” may prove a lower-priced alternative to traditional full commission brokers. These companies generally charge a flat fee—based on the asking price of the house—to screen prospective buyers, arrange appointments, suggest a price, and negotiate with buyers. However, showing the house would be the owner’s job.

   If you decide to sell your home on your own, remember the following tips:

1. Price It Fairly. Compare your house to others in your neighborhood that have recently been sold, and factor in any improvements or unusual assets.
   
   
2. Advertise. Use more than just a “For Sale” sign on your lawn. Circulate brochures, run ads in the local newspapers, and put notices on bulletin boards and real estate websites.
   
   
3. Screen Buyers. Before accepting an offer, ask the buyer to supply a financial statement or get mortgage pre-approval or pre-qualification.

   When should you decide to discontinue selling the home on your own? Assuming a house is properly priced and in a reasonably active market, a homeowner attempting to sell without professional assistance should allow six to eight weeks without a written offer. With help from a service agency, give it four months. After that, call a professional real estate broker.

   Selling a home on your own can be a great deal of work, but you may save many thousands of dollars that would normally be “lost” to real estate commissions. On the other hand, while the prospect of improving one’s financial position is tantalizing, the task may be too time-consuming or beyond your expertise. Professional real estate assistance, whether from a service or a broker/agent, may “save” you more than you realize as you set out to sell your own home. As you can see, there is no perfect answer to whether or not you should sell your house by yourself. However, doing a little research and arming yourself with some information can better help you decide what is the best strategy for you and your situation.