This post is sponsored by Haven Life Insurance Agency.
It’s kind of a shame that there isn’t much curriculum devoted to financial literacy in schools. Most of what I’ve learned has been a mix of trial and error and podcasts/articles/research over the years, plus a few meetings with financial planners over the years. On the crest of turning 36, I finally have a really solid foundation of the important components of personal finance: budgeting, saving for retirement, being totally debt free (my goal is to pay off our mortgage, but I’m not there yet!), life insurance, college savings for the kids, wills. All that fun adult stuff. I was so clueless in my 20s that I thought car payments were a good thing that adults did. I once had a car payment (at 0%, but still) when I had the cash in savings to pay off the car. I finally got sick of the payment in my monthly budget and just paid off the darn thing. Now I know how dumb debt is and have no plans to ever go into debt again.
As you all well know, changes are on the horizon! In fact, my family status has changed quite significantly in the past few years. Another big little change is arriving any day now via a stork! Thus, Thomas and I are evaluating all of our “adulting” tasks to prepare for baby’s arrival.
College savings
Double the kids, double the college savings. For Mazen, we have a combination of a 529 plan here in Virginia and a separate mutual funds account for college savings. The good thing about 529 plans it that siblings can share them as long as the kids don’t overlap in account usage. So if Mazen doesn’t go to college or goes in state and that ends up being less than we’ve saved, then his brother can use the rest. So we’ll have them “share” the 529, putting in what we think will cover the minimums, and have the mutual fund account for the excess.
Life insurance
Most people need life insurance coverage when they have people in their lives who rely on them financially – a partner, a child and even siblings or parents. The proceeds of a policy can be used to help with expenses like the mortgage, childcare, school savings, and the many other day-to-day expenses we all have.
Luckily term insurance is relatively inexpensive – usually a couple hundred dollars a year. For example, a healthy 35-year-old woman can buy a 20-year, $500,000 Haven Term policy, issued by MassMutual, starting at about $19 per month. I’ve had life insurance since Mazen was born, but Thomas hasn’t had dependents until this year so it’s new to him. We’re in the process of putting some in place for him, and I may purchase additional coverage now that I’ll have two kids as well. Term policies are generally offered in 10-, 15-, 20- and 30-year term lengths. The right term will depend on your age and how many years until your dependents will be adults or the mortgage will be paid off.
Haven Life, the sponsor of this post, makes it simple to buy term life insurance online. Founded by a father of two, Haven Life is a mission-driven online life insurance agency that’s backed and wholly owned by MassMutual – a leading life insurer. If you don’t already have life insurance, Haven Life has helpful tools like a life insurance calculator to estimate your needs or a quote tool to find out how much a policy will cost. From there, you can easily apply online and, if approved, start coverage that day.
Haven Life also recently introduced a new offering called Plus – a rider that provides Haven Term policyholders with access to a suite of no-cost or discounted benefits such as an online will drafting service, a digital safe deposit box, and a discount voucher at MinuteClinic inside CVS Pharmacy and Target stores.
Wills
Speaking of wills, any time you have a major life change, a marriage, a divorce, a baby, you need to update your will, advanced medical directive, and power of attorney so that it accurately reflects your wishes. Our family situation is a little complicated with two children of two different dads, so we’ve had to have some talks about what we would do in different scenarios. It’s a sobering conversation, but it’s one every couple needs to have. Making decisions and sharing those decisions with those who are involved in advance of an accident means everyone is on the same page and there are no surprises. Luckily, just like life insurance, creating a will is becoming much easier. If your family scenario is fairly straight forward, Haven Life Plus partner Trust & Will is worth considering for an online will creation option. (And if you’re a Haven Term policyholder in an eligible state, you can create one at no additional cost.)
Health insurance
Health insurance usually gets evaluated every year, so this is one that many people stay on top of. It comes as no shock that health insurance for a new baby will need to be added to the family plan. What was a shock was how much it’s going to cost! (Especially when you combine that with the deductible cost of prenatal care and having a baby!) We’ll need to make some adjustments to our budget for the new expense. However, most of the first year’s preventative care and checkups are all included in the plan, so that does make the cost easier to digest.
Bringing a baby into this world is super exciting, but it’s also a big responsibility! In addition to buying all the baby things, preparing for birth, and nesting, it’s always a good idea to get your adult life in order before the baby comes. Last time I renewed my passport, set up all my bills on autopay, and worked on the above list. This year I’m going to try to vote in advance too! Haven Life’s blog has a great even longer list of things to think about before the baby comes. You can never be too ready 🙂
Thanks to Haven Life for sponsoring this post.
Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and not be available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.
Haven Life Plus (Plus) is the marketing name for the Plus Rider which is included as part of the Haven Term policy. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners).
I’m always in awe at how responsible and prepared you are for the new baby, Kath! You’re a shining example! 🙂
Charmaine Ng | Architecture & Lifestyle Blog
http://charmainenyw.com
I totally agree that adults need to be prepared financially for those “what ifs”, even the ones that aren’t so fun to think about. I work for a life insurance company, so I see this stuff day in and day out. Great post! I firmly believe high schools and colleges should have some sort of required class on budgeting and financial wellness.
The voting and setting things (bills!) on autopilot is smart!!
I urge EVERYONE to please, please, purchase life insurance. My husband died suddenly when I was 46 with my 15-year-old daughter at home and 21-year-old son in college. I’m a “put your head down, work hard and get it done” woman, but that life insurance has made the sudden loss just a little bit easier. And one of my best friends is an executive with MinuteClinic – they are awesome.
I’m so sorry for your loss. So glad you guys were prepared.
That’s so heart breaking. I’m sorry.
I would like to suggest when one has the sobering conversation concerning wills, life insurance, and advanced directives, that organ donation be included in the discussion!
Great suggestion
I find this topic quite interesting – specifically why people make the choices that they do. A lot of thought needs to be put into it and discussed with those involved. With that said – I was surprised at how emotional I was at the lawyer’s office when it came time for us to do ours! Sobering for sure.
Great reminders! Thank you
Just wanted to comment that we purchased a new life insurance policy with Haven Life this year. They were so easy to work with and organized. We have another policy with a well known company that is behind the times. Haven Life communicates well, is quick and sets up automatic monthly drafts. If your readers are below the age of 40 and healthy they shouldn’t need an exam. If they do, they just come to your home to check your vitals. Everything is done online otherwise. They even had immediate coverage. Sorry, I sound like an ad ?.
This is all great to hear first hand!
Thank you for this comment! We have policies with State Farm (both 38 non smokers) and it is insanely expensive for a 20 year term. I feel like there have got to be other, better options out there. I’m definitely going to look into this!
Hi Kath! Thank you for the mention. We love being partnered with Haven Life. They help forward our mission of helping every American have an Estate Plan—especially those with minor kids! Great blog!
-Daniel, Founder @ Trust & Will
Thanks for stopping by!
Such a great post full of important reminders we don’t often think about or talk about in our mid 30s and 40s. However, the sooner we begin to plan and save (which will allow us to still live in the now but with even more peace of mind) the better. Tomorrow is never promised unfortunately. Thank you so much for a wonderfully practical post!
Omg I love that you’re voting early. Come on, midterms!! We FINALLY got life insurance on each other now that she’s 26mo. Lol and omg paying for college- SO STRESSFUL. we are putting a couple hundred into the 529 and a couple more into the investment account but it never feels like enough.
I find it a bit privileged to say it’s “dumb” to have debt. If I didn’t have debt I would not have had the degree I have nor would my husband. Investing in education is a wise use of loans since your income and quality of life increase. Not every family can save enough to pay for the full cost of college but that should not deter one from getting an education.
I’m just quoting the King of Getting Out Of Debt – Dave Ramsey. He would argue your point, probably saying that there were ways you could have avoided it if you’d been super motivated to avoid it like going to a different (cheaper) school, scholarships, extra jobs during college, delaying a graduate degree until you could cash flow it. I agree – that’s not easy to go though. But people do it.
My financial advisors told us to build our savings rather than get aggressive on loan repayment (student specifically) Depending on what your interest rate is debt may not be necessarily dumb. We’re both lawyers and there’s no way we could survive on no debt
I 100% drink the Dave Ramsey cool-aid and he would say your financial advisors are giving you bad advice…but that’s just what he would say! He doesn’t even believe in 0% interest loans because they tie your hands and limit your wealth building power, which is your income, with payments. He also says the best plans must work on sunny AND rainy days, and you never know what curveball life will throw you. When you’re debt free with an emergency fund, you have the most options.
I don’t care what Dave Ramsey says. It’s dumb to pay off a 0% loan!!! What a waste. Readers, please educate yourself on the rationale behind other schools of thought rather than following blindly.
Also student loans are not inherently bad, especially for graduate/professional school. Maybe for a bachelors degree given earning potential trade off but it’s a stretch to make such a blanket statement. My partner is a doctor who is meaningfully contributing to society but has ***evil*** student loans bc his parents aren’t rich!
But yay Life insurance. Agree with that advice.
Would you take out a $2,000,000 loan at 0%?
A $2 million loan at 0% would be a NO BRAINER. Kath, do you actually know anything about finance??
That is a heck a lot of risk!! If anything goes wrong you still have to pay it all back, interest or not.
And is that apples to apples Kath? I am a long time follower and can’t stand mommy shaming you get. While I completely support being responsible and “not biting more than one can chew”, to put it in layman’s terms, as a professional accountant I find the advice frankly ridiculous.
Financial professionals often take risk out of the equation. Sure if your plan works it was the “right choice” but even the best plans can fail.
And yes, if you can have access to $2M at 0%, do it. You will make a lot of money if you invest it wisely 😉
Only if you have a crystal ball!!
But seriously, this is getting a little silly. All I said was that I would never go into debt again, and that I’ve learned a lot about personal finance over the years starting out clueless fresh out of college. Debating whether or not student loans or any loans are “worth it” or practical is kind of a moot point – it’s a personal choice. I’ll do me, and you guys do you!
Yes, but saying debt is “dumb” is irresponsible. And frankly insulting – a lot of people cannot afford to buy a car in cash, but still need one to get to and from work, so take out a loan and make a car payment every month. Same with student loans – my family did not have the financial means to send me to college. I chose a state school, applied for every scholarship and financial aid I could get, and still had to take out student loans to pay the difference. The degree I have has allowed me many more job options, with higher income potential than if I did not take out the loans to pay for the degree.
Always support you Kath, but sometimes you are very polarizing in your opinions and posts. And don’t forget -it’s us readers that are ultimately supporting your business, so you might want to try being a little more gentle in your posts and responses.
As Dave would say, a $1,000 car and a $20,000 car will both take you to work. Student loans are tricky, and I think a lot of people would say if your option is go to college and take out a modest loan to fill the gap or skip college altogether, going to college is the better choice. But it’s not the only choice that will lead to success. I’m actually listening to Suze Orman’s “Women and Money” show right now on Oprah’s Supersoul podcast and she said the following: “What makes you the most powerless in life? Debt. When you have debt, you have bondage. And you will never have financial freedom if you’re in bondage. You will never feel strong. You will never feel smart. And you will never feel secure.” Suze and Dave are both wildly successful financial educators who have helped millions of people get financial freedom. I happen to agree with them, but we are all entitled to our own opinions.
I also want to say that it’s not like I’m claiming to be perfect and never having debt in my own life. We took out a lot of debt to open the bakery and it was TERRIFYING. I hated the feeling of being trapped by loans, and I never want to feel that feeling again. The whole point of the opening of my post was that there were things I learned from real life experience that I wish I had been better educated on as a younger woman.
I worked 2 jobs in highschool & while in university (not Ivy League)… I don’t think it’s fair to assume that motivation and choosing a cheaper school are all that’s needed to live debt free. Doing my undergrad allowed me to get a well paying job, one that allowed me to pay off school debt within 2 years while pursuing graduate studies. Everyone comes from different situations and means! I don’t think anyone wants debt, but unless parents are paying 100% of their child’s education & living expenses it seems inevitable for kids now..
I’m just repeating the Dave Ramsey advice! He’s super conservative about it. If you called his show, he would have answers for all of your justifications. Listen to one of his student loan specials. I think it’s awesome that you paid off undergrad while working AND doing graduate work- Dave would agree.
I think the important takeaway here is that all of us who are having kids need to save for their college so we set them up as best as we can and hopefully pay for 100% (even if that is community college and transferring to a university) so we break the cycle. This county has a real student loan crisis happening because people think that student loans are inevitable and “good” debt. So many people think saving for college and retirement are things they can put off “when they’re ready”, but the sooner you can start the better (compound interest!)
I totally understand that student loans have just gotten completely out of control lately. However, even though I will have the means to pay my kids college, I will not be doing so. I plan to pay half. I came out of college with debt as did my husband. Having such a huge financial obligation teaches you responsibility, work ethic (pick up extra shifts to pay off your loans, etc), and determination. Your college-aged child needs to realize that college is not a right, it’s a privilege. If mom and dad are going to pay for everything for them, they will never have the appreciation of what hard work went into affording them the ability to go to college.
I agree with so much that’s been said here about your tone towards student and car loans. Not everyone is able to pay for necessary things that are necessary or desired to/by many of us, especially right out of school. Agree with Dave Ramsey or don’t, but I for one was offended by your opening paragraphs. I took out six-figure loans for school and a loan for a car afterward. I’ve paid everything off, built a nice savings account and a healthy bank account,save for my children’s futures, and don’t regret doing what I needed to do to accomplish what I was able to accomplish. I work hard and do the best I can, as do many of us who read your blog. You are entitled to your opinion and to live your life as you wish, but the judgmental tone of this point is upsetting, offensive and unnecessary.
I’m glad everything worked out well in your case.
Hello! I wanted to share something that I recently did for my kiddos – freeze their credit files at each of the credit bureaus, Experian, Equifax, and TransUnion. The WSJ recently recommended placing security freezes on minor kids’ credit files – https://www.wsj.com/articles/new-on-parents-to-do-list-checking-childrens-credit-history-1535457603?shareToken=stf41e6bdcd1a44f338e42be6687d983c6&ref=article_email_share. I asked each bureau to create then freeze each credit file. I will admit that gathering the supporting documents (Social Security cards, birth certificates, driver’s license, etc) was a pain – but the peace of mind that we won’t discover identity theft years down the road is worth the paperwork now. I will also say that the customer service reps at each bureau weren’t necessarily helpful, so I had to be persistent!
Excellent advice! I have heard this mentioned a lot recently too.
I can see a lot of people are rubbed the wrong way by your opening statement about debt being a bad idea – the only thing I have to add is that it’s actually important that even if you *can* buy things in all cash, you should also make it a point to finance some purchases through loans or CCs so that you can build up your credit score.
Part of what impacts your credit score is length of credit history (among other factors like debt:credit ratio, on-time or late payments, number of hard credit inquiries, etc.), so the earlier you can start building your credit (responsibly) the better off you’ll be down the line. Having good credit impacts all sorts of financial decisions in your future, including your ability to get a home loan (which most people need), or low-interest car loans or HELOCs. Because of this, it’s absolutely in your best interest to keep and pay down a low- or no-interest loan/credit lines if you have access to them because it’s helping you build a strong credit history/score.