Wednesday, May 27, 2009

Financial Suggestions: A Word About Insurance and Death at Early Age

I will miss racing Steve Larson, if only for the swim, he was always nice to me (probably because he always kicked my ass in the bike and run) but at least he was cool. I didn't mind racing a former pro, it always elevates my game to race against the best. I race a clock with a bunch of other people.

With the recent death of Steve Larson at 39, I called a friend of mine who I sold my insurance and financial services business to in 1995. We caught up a bit on life and family and I supplied him of Steve's story - dying at 39 with five children.

When I was a financial planner, I saw and heard it all. 98% of people you see do not have cash in the bank and enjoy $8 to 15,000 of credit card debt and are woefully under insured.

Let's start with the basics, you can't go bankrupt if you don't have any debt. Being unemployed, this is a big ease on my mind as Lorrie and I just don't have any credit card debt. For those of you with credit card debt, you may notice that a lot of companies are playing with your minimum payments. My dad used to call credit cards "juice loans", referencing the old loan sharks in the "neighborhood". Financially, a credit card debt is like carrying around an anvil, not very practical for making strong moves. To help, make multiple payments a month. Make your minimum payment on the date you are supposed to. Then make multiple additional payments of whatever you can afford. $1 even makes a difference. The reason? Part of most interest calculations is how many days from your last payment. So, in theory, you could pay your minimum and then one cent every day and never have any interest added on to your balance.

Pay yourself first. When I first left college I didn't even have beer money at the end of the week. How the hell was I going to save? Easy, pay myself first by having $10 each week taken out of my checks. $10 became $20 and at the end of the month $40. $40 x get the idea. Once I made it to $2,000 I rewarded myself with a cruise. Just about EVERYONE you see on the street has less than $1,500 in the bank.

Life insurance, the best kind is what you have when you start dirt surfing. Another troubling issue is the lack of life insurance. Life insurance isn't for you, it is for your family when you are dead. So if you care about your family, you'll get insurance. It takes care of the funeral expenses and more depending on your planning. I have a great deal of life insurance. We joke that because it is "just" Lorrie and I that the "extra" money is for the survivor to "pay for therapy" when we are gone. But it is more than that, I want to replace my income so Lorrie can go on a cruise and live a lifestyle that she is now used to living. If you have children, it will allow the survivor to stay in your current home, schools and life that they are used to. Some people even plan for their children's education in their life insurance. So when I see a guy like Steve pass away, five children and a spouse, I think about how much insurance they guy had and if he had his affairs in order. Do you have a will, etc? If you're reading this blog its highly likely that you aren't in college any more. Do you know what happens to your children if you don't have a will? If you knew, you'd be running to an attorney right now if you didn't have one!

The reality is that we participate in a sport that has drownings, fatal crashes, heart attacks and more every day. So as you plan your workouts, plan your finances.

Please. For your family if not for you.

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