#YOLO. So Plan Ahead.

Do the kids even say #YOLO anymore?  Maybe they say something like, “Bruh, dat fleek is lit! Howbow dah?!”  I don’t know.  When I was a kid, our slang was still at least words, we just used them wrong.  Today’s slang all just sounds like someone ripped half the pages out of a Dr. Seuss book.

Anyway, now that I’ve gotten my rocking chair set up on my porch, and I’ve got an eye on those hooligans on my lawn, I want to bring up the most interesting topic you’ll read about all day: life insurance.  Come back, don’t leave!! I don’t want to sell you anything in particular, but I do want to plead with you to consider it, because this is so important.  If you have anyone that depends on you, whether it’s a spouse, children, elderly parent, whoever, close your eyes for a minute.  Well, not yet, read the rest of this, then close your eyes.  Imagine that you’re on your way home from work, and a drunk driver merges into your lane right where your car is, sending you into the median.  The next thing you know, you’re standing in front of God Himself, and there is no chance for a do-over of your life on earth.  What happens to the family you leave behind tonight?  Tomorrow?  Five years from now?  If your wife has been a stay-at-home mom, is she going to have to somehow find a full-time job in addition to all she’s been doing with the kids, and now without your help?  If you’re part of a dual-income family, is your spouse going to be able to survive without your portion?

Alright, open your eyes.  Depressed yet?  Yeah, it’s not a light topic.  Anyway, I had that realization one day when listening to Dave Ramsey rant about it.  I mean, R depends on me, just like I depend on her.  I know that’s “part of marriage,” but when you actually think about how it would affect your spouse’s life if you suddenly weren’t in it anymore, it really hits you.  So despite trying to save every dollar we can for this debt payoff journey, we decided that life insurance was worth the expense.  But aside from car insurance, I really had no idea what I was doing with insurance in general.  So I started looking around and came up with some criteria for a good life insurance policy.

Insurance Should Be Cheap

We buy insurance hoping to never have to use it.  What else do we say that about?  Nothing.  People would look at you like you were crazy if you went to the checkout counter at Target with a cart full of stuff and starting telling the cashier how it was all going to sit in your garage until you forgot you had it.  That’s exactly how insurance works, though.  I hope that I never have to use the insurance I will be paying on for the next 20 years.  Well, I guess technically, I won’t, right?  That was a dark joke, but it’s still okay to laugh at it.  Anyway, if you’re going to buy something you never use, especially over a long period of time, you should try and spend as little as possible on it, right?  For us, that meant going with a term policy vs. whole-life or permanent policies.  If you’re our age (mid-20s), term policies are dirt cheap and will hardly make a ripple in your budget.

Insurance Should Be Adequate

Our goal in getting life insurance was to allow R to continue living comfortably in case I wasn’t there to help her anymore.  The big unknown, of course, is what stage in life we’d be in if I died unexpectedly.  Do we have a house?  Do we have children?  Are we taking care of any of our parents?  Only God knows the answers to those questions.  All we can do is plan for the scenarios we can think of.  Our policy is enough for R to buy a house so she’s not homeless, pay off our debt so she’s not taken to court, continue paying the bills so she doesn’t have to worry about losing my income, and invest to provide for our children if we have any.  If I had gone with a $20,000 policy, that certainly would have been very affordable now, but it wouldn’t have done anything for R’s well-being in the long run.  On the other hand, if I’d taken out $50 million, we’d be breaking the bank every month for severely diminished returns.  She doesn’t need that amount, so it wouldn’t be worth the hit to our budget every month.

Insurance Should Be Simple

As sad as it may be, the insurance industry market is based on fear.  If you want to be protected, you need to buy their policy.  Oh, you don’t have zombie apocalypse insurance?  Sure, it probably won’t happen, but if it does…  As such, there are all kinds of dubious add-ons out there for every type of insurance.  Every year, I have the option to cover vehicle-related injuries on my health insurance and health-related injuries on my vehicle insurance.  If you don’t pay attention, you can end up paying double for the same coverage.  The last thing I want for R to have to deal with after my death is confusing insurance policies, hoops to jump through, and “gotchas” in the fine print.  This insurance should do one thing: replace my income if I’m not here to earn it.  We don’t need it to also give us a retirement cushion, or pay for our kids’ college, or pay the doctor’s bills when we’re old.  That’s another reason we went for a term policy: it doesn’t really do anything else except wait for me to die.

Please, Please Think About It

I know what it feels like to stand at the bottom of a mountain of debt, looking up and trying to see the sunshine through the clouds surrounding the top.  It feels like every single dollar is the most precious resource in the world, and the thought of spending them on a product you’re not likely to ever use sounds idiotic.  But think of how it would be for the family you’d leave behind if you didn’t find room in your budget for life insurance.  Now they’re left trying to reach the same peak, but their packs are gone, they have no food, and the clouds are getting darker.  I don’t think it’s a situation any of us feel cheery talking about, but it can be the difference between grieving for a while before recovering, and having to completely change lifestyles for the people that are the closest to you.  Now, go hug your spouse and kids, and then do what you can to provide for them, even after your death.

9 thoughts on “#YOLO. So Plan Ahead.

  1. I was hoping you could give me some advice. We are doing Dave’s plan and it is really working but we are going to be getting back a large tax return (around $3100) and I was going to pay off our three smallest debts (which have minimum payments of $25, $52, $62 and our current snowball is about $720) but then I got to looking at the numbers and our largest credit card ($4777) has the highest interest rate out of all of our debts (23.4% ouch) so every month I pay $147 to that debt (the minimum) and $95ish goes to interest. I think I should take the $3100 + any extra money and pay down the largest card. It would lower the minimum on that card and then the next month I could continue back to paying smallest to largest. The other debts in our snowball include interest free things like hospital/clinic bills that the hospital has agreed to a payment plan with us (yes, I know, it is still debt and I need to pay it off). What are your thoughts? We start FPU next week! Woohoo! And we do have our $1000 emergency fund. Also, we are going to be attending a wedding in California in August. Do you think I should budget $150 each month plus a little extra this month towards that or just budget the lump sum for July and August and pay minimum on debt? Sorry for all the questions! Any advice from anyone would be great!

    Cheers to my debt free journeymen(and women)

    1. That’s awesome! You guys are going to love FPU, it motivates you more than you thought could be possible 🙂 As far as your tax return, Dave would say (after listening to him for long enough, you’ll be able to predict just about every word out of his mouth – at least he’s consistent!) that if you do things right, you’re going to be in debt for so little time that interest rates won’t matter. By the time you get to that huge card, even if it takes a year, it’ll only add $1,000 to the balance. At that point, it sounds like you’ll be able to throw $1,000 a month at your debt, which means you’re adding one month to your payoff date. And once you start FPU, I guarantee you’ll find some extra room in your budget to knock it out even faster. Trust me, I started out the exact same way, and it was just frustrating. The math does seem to work better with the avalanche method, where you pay down the highest interest rate first, but we wouldn’t be where we are if we were good at math, would we?? 😛 Just do it from smallest to largest, and as those little debts start to roll off your monthly budget sheet, you’ll forget all about the interest rates. You’ll be going so fast they won’t have time to hurt!

      For the wedding in August, I would suggest setting aside little amounts every month from now until then. That way if something happens in June, you’re not scrambling trying to cover that emergency plus round up the entire cost of travel at the last minute. Planned expenses like that generally don’t qualify for a “pause” on the debt snowball, they just need to be added in and slow it down if necessary.

      You’re definitely asking the right questions, and I don’t mind answering them at all! You can email me any time at stewardandslave@gmail.com, or check out the Dave Ramsey subreddit here: https://www.reddit.com/r/DaveRamsey/ If you’ve never been on Reddit before, it can be a little overwhelming, but it’s basically just a big message board and the community there is super helpful. And of course, Dave’s shows are always great sources of info!

      1. Kyle, thanks so much for all the info and much needed advice! And I read part of your post in Dave’s voice hahahaha! I will defintely checkout Reddit! And what you said about putting the snowball on hold isn’t a great idea because of emergencies is sooooo right! I didn’t even think about that!

  2. Good thoughts on insurance. It’s tough to find the right balance between too-small-speedo-under-covered and napalm-suit-over-covered.

    1. It really is, especially when you have an active imagination like I do. What if I die in a nuclear armageddon, and R needs money to build an underground bunker to resist the robot uprising?

  3. Yes! Not enough about insurance on PF blogs but so so important. I have to admit, this is one of those things I only got woke to not that long ago so I still have A LOT to learn. But our situation right now is no kids, no mortgage, so figuring out that magic in-between number was a little bit easier (though like you said, hard to envision those infinite future what-if scenarios!) Thanks for the post!

    1. I agree, there’s a ton of room for learning! I hope I can help someone think about the hard choices we all need to make. Thanks for reading, Kate!

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