Do not make the same mistake I did and overpay for your Homeowner’s insurance policy. A few years ago I began working with a financial advisor. Part of their process was formulating a strategy for me was to review all my financials. Yes, this was painful and maybe even embarrassing realizing how much I may have spent on clothes or going out to eat in a year. But one of the most shocking things I wasted money on was … Homeowner’s Insurance. Like most of us, It was part of my mortgage payment that was paid by the lender on my behalf out of escrow yearly. I did not think I was overpaying, I honestly did not ever think about it. Like many Americans my home value changed after the market collapse and was taking years to recover. Most insurance companies just build a yearly increase into the policy to compensate for the replacement value of your home. This amount is typically less than your total property value, because the land cannot be destroyed and therefore does not need to be replaced. If you do not pay attention your insurance can be outpacing the actual value that your home is increasing. I was overpaying my home owners insurance by $900 per year for about 6 years! That’s a lot of cash! If your home is valued at $200,000, and you are paying for a policy to cover $280,000 value on your home and your home is lost your insurance is only going to pay the $200,000. So why pay for the extra $80,000 in coverage that you will never receive benefit for? I found a new insurance company that has yearly check-ups with their clients to ensure that they are not overpaying for the policies. This can also be true of your car policies. Also, do not be afraid to shop around for home owners insurance, compare policies and prices. You may find some extra cash for clothes or a few more nice dinners out!