Beating Broke

When Do You No Longer Need Life Insurance?

November 4, 2019 By MelissaB Leave a Comment

Life insurance is the most affordable peace of mind that I can think of. For usually less than $100 a month to cover both you and your spouse, you can rest easy knowing that if something happened to you or your significant other, your family would be taken care of. When you’re deeply grieving, you won’t need to worry about making a house payment or taking care of your kids. You and your family will be protected financially. But when do you no longer need life insurance?

Life insurance is meant to be a temporary measure. You shouldn’t need it forever, which is good because it gets significantly more expensive as you age. What gets a bit tricky is predicting how much life insurance you need and when you will no longer need it.

My husband and I bought life insurance 15 years ago, when our oldest child was just four months old. We got a 20 year policy, so our oldest will be nearly 20 when our policy expires. Our youngest will be just 14 then, so we are planning to buy another policy that will overlap our current one. We’re wrestling with the idea of just getting a 15 year policy or a 20 year policy.

If you’re like us, trying to decide how long you need life insurance coverage and how much you need, here are some variables you may want to consider:

How Long Do You Want to Cover Your Children?

You’ll definitely want to have insurance coverage until your youngest child turns 18. Many people decide to carry coverage until their youngest child is 22 or 23 because college can be so expensive. If you or your spouse dies, your child may need to rely on part of the life insurance money to help pay for the remainder of college.

When Do You No Longer Need Life Insurance? — Photo by John-Mark Smith on Unsplash

How Many Years Are Left on Your Mortgage?

While this variable may not affect how many years you want coverage, it may impact how much coverage you should have. You want to make sure you have enough life insurance to pay off your mortgage, plus more to cover other expenses.

Does Your Spouse Have a Medical Issue?

If your spouse will have trouble working thanks to a medical issue, you’ll want to carefully consider both the length of time you’ll need insurance and the amount. You’ll want to keep your coverage until you’re financially secure enough that your spouse will have enough money to survive even without life insurance.

Does Your Spouse Have a Career?

If your spouse has stayed home with the kids, how easily will he or she be able to re-enter the workforce if you die? Don’t take this lightly. Entering the workforce after a long break can be very difficult.

Mary is a family friend who is a stay-at-home mom. Her husband was killed in a car accident when he was only 32. Thanks to his life insurance policy, she was able to stay home with her children until they graduated high school. Because she invested the policy wisely, she never did re-enter the workforce. Instead, she volunteered in her free time.

How Much Debt Do You Have?

Again, this is a question of how much coverage you will have. In addition to your mortgage, you want to make sure there is enough life insurance to cover your remaining debts such as car loans, student loans, and credit cards. In many states, even if your spouse dies, you may still be held liable for these debts.

Choosing how much life insurance to get and for how long requires careful consideration. These questions should help you make the right choice.

Are there any other variables you use to consider how much and how long you should have life insurance?

Costco Can’t Be Beat For Large Purchases

October 28, 2019 By MelissaB 1 Comment

I love Costco for so many reasons! My primary reason for getting a Costco membership is because they offer fabulous prices on organic fruits and vegetables and rice milk and so many other grocery staples in our household. But, now that I’ve been a member for over five years, I’ve discovered two new, perhaps even better reasons why Costco can’t be beat for large purchases: their concierge service and their return policy.

Costco Concierge Service

Three years ago I bought a computer at Costco. Within three months, I was having serious issues with it. I called Costco’s concierge service, and they arranged for the computer to go back to the manufacturer for repair at no cost to me. They sent me a box, and I shipped out the computer.

I’m a freelance writer, so not having my computer for two weeks was inconvenient. When we were reaching the promised repair time of two weeks and I didn’t have my computer back, I simply called the concierge service who kept me on the line while they contacted the manufacturer’s customer service. Thanks to some nudging by the Costco concierge service, I got my computer back within the promised two-week window.

The concierge service also helps you troubleshoot. We bought a TV about five years ago that could show YouTube, Netflix, Amazon, and other internet programs. Yet, when we moved across the country and set up the television, it no longer would sync with the internet. A quick call to Costco’s concierge service, and we had the programs on our tv again at no cost for the assistance.

Costco Can't Be Beat for Large Purchases — Photo by Henry & Co. on Unsplash

Costco’s Return Policy

I love, love, love Costco’s return policy. Forget holding on to receipts for proof of purchase. If you need to return something, Costco simply looks into their data base using your membership card and finds proof of purchase. I returned some new pajamas that my daughter didn’t like, no problem. I rarely use their return service because I like almost everything I buy, but when I do need to use it, I couldn’t ask for better customer service.

Last May, my husband and I bought a Shark vacuum at Costco. My daughters love to craft, and frequently, there are scraps of paper and yarn on the carpet, which we vacuum up. Apparently, this type of work was too much for the Shark vacuum that we bought because by December, the vacuum had stopped working efficiently; instead, it just spit out everything it sucked up.

Costco Return Policy — Photo by The Creative Exchange on Unsplash

I called the concierge service, hoping to have it repaired, but apparently they don’t repair vacuums. Instead, I was told to return the vacuum to Costco, which I did. To my amazement, Costco offered me a full refund, even though we had used the vacuum for seven months.

I took the store credit and turned right around to buy the heavy duty Shark vacuum that Costco sells. You can bet I will keep buying all of my electronics and small appliances at Costco. No other store rivals Costco with their concierge service and generous return policy.

Are you a member of Costco? Have you taken advantage of their concierge service and return policy?

Should You Create Sinking Funds Before You’re Debt Free?

October 21, 2019 By MelissaB 1 Comment

You have debt. A lot of debt. And now you want to pay it off, IMMEDIATELY! You’re fired up. You’ve read financial blogs, read debt payoff gurus books, and you’re setting up your budget. Should you create sinking funds before your debt free or put all of your money toward debt repayment?

What Are Sinking Funds?

If you’re new to budgeting, sinking funds are money you put aside for irregular expenses you know will come up during the year. Let’s say you spend $1,000 each Christmas, so you decide, in January, to set aside $83 a month in your Christmas sinking fund. When December rolls around, you have all of the money you need to pay for your Christmas gifts debt free.

Create Sinking Funds Before You Pay Off Debt? — Photo by Eugene Zhyvchik on Unsplash

The Argument Against Sinking Funds

Some argue that you shouldn’t set up sinking funds until you’re debt free. What is the point of putting $83 aside for Christmas when you’re paying 15% interest on your credit card? That $83 each month would be better served if you applied it to your credit card and reduced the balance and therefore the amount you’re paying in interest. You’ll get out of debt more quickly this way.

The Flaw With This Kind of Thinking

There is one major flaw with this kind of thinking. What will you do when you need to actually pay one of these irregular expenses?

I live in Arizona, and six months of the year, my air conditioner runs night and day. During those months, my electric bill ranges from $225 to $275, depending on how warm it is outside. Then there are about two months a year in flux when the electric is $125 to $175, and, in the winter, for four months, my electric settles down to $80 a month.

My budget can’t handle such big fluctuations in our electric bill, so every month, I set aside $150 for electric. When summer comes, I have a large sinking fund to help me pay for those hot months when the electric bill will be much higher than $150.

If I didn’t have a sinking fund, how would I pay for the high electric bill in July?

A Happy Compromise

I encourage everyone to set up sinking funds, even if you do have lots of debt. Part of getting out of debt (and staying out of debt) is changing your attitude toward money. What’s the use of putting all of your money on your debt if you have a $1,500 car repair, no money set aside, and you have to charge it and go further back in debt again? That’s not a budget roller coaster I want to be on.

But there is a compromise; if you have extra in the sinking fund after the event is over, apply that money to debt. For instance, let’s go back to the sinking fund of $1,000 at Christmas. Let’s say you’re conservative, shop the deals, and only end up spending $750 on Christmas presents. Great! Take that leftover $250 and apply it to debt. Then, in January start saving for the sinking fund again.

If you’re paying down debt, make sure to create and fund sinking funds. You won’t be sorry, and you’ll be changing your attitude toward money so when you get out of debt, you stay out of debt.

Do you create and fund sinking funds each month? If not, how do you handle it when large, unplanned or irregular expenses come up?