You Gotta Play Defense
Hey Y'all! Now you know I'm a sports fan and basketball was my first love. If you've ever seen me play, you know defense is not my specialty. Defensively, I was usually in the right spots and manipulated my lack of athleticism into knowing footwork and angles that allowed me to not look silly when defending opponents. My specialty was offense, shooting and passing, and adding value to our team that way. Offense is important and way more fun, but, you gotta play some defense. I didn't expend all my energy on defense, but played enough for my coaches to keep me on the floor. But let's be honest, I'm not expecting anyone to continue reading if this blog was actually about my abilities as a defensive player on the basketball court.
If you have read any of the previous blogs, you know my life and our family has changed a lot over the last five years. I started dating Megan, grew up a lot, had a lot of adult conversations, got engaged, changed jobs, got married, bought a house and had our first child. All of this made me think even more about what the future holds, and taking control of the items we can. These life changes forced us to learn more about what happens when the unexpected happens. We all hope for the best and think we are invincible, but need to plan as if that is not the case.
The defense I'm referring to from above includes a series of products that we think are necessary and have made sure to have in place. Review the list, then read on for more information about each item below.
Will / Power of Attorney - Health & Financial - We just created our will in December and realistically should have had this in place earlier. The purpose of a will is to have a clear and legal series of orders to happen after you pass away. Megan and I created this document together and they name each other to receive our assets, but go further in the case of us passing together. This was an incredibly difficult document to compile because it discusses your death and also details the orders for our daughter and what would happen to her if we would pass. While it was difficult and scary, we wanted to have these thoughts legally written down, so that should this horrific situation occur, the parties involved know what we would like to happen.
Teaching our daughter to love basketball at an early age!
If you have read any of the previous blogs, you know my life and our family has changed a lot over the last five years. I started dating Megan, grew up a lot, had a lot of adult conversations, got engaged, changed jobs, got married, bought a house and had our first child. All of this made me think even more about what the future holds, and taking control of the items we can. These life changes forced us to learn more about what happens when the unexpected happens. We all hope for the best and think we are invincible, but need to plan as if that is not the case.
The defense I'm referring to from above includes a series of products that we think are necessary and have made sure to have in place. Review the list, then read on for more information about each item below.
- Will / Power of Attorney - Health & Financial
- Life insurance
- Emergency fund (starter)
- Emergency fund (3-6 month)
- Short term disability
- Long term disability
- Identity theft protection
- Workplace benefits (and understanding them)
This is who we are protecting when we have a will and life insurance. These are small things we can do to be there for our family/child(ren) if we are taken from them.
Will / Power of Attorney - Health & Financial - We just created our will in December and realistically should have had this in place earlier. The purpose of a will is to have a clear and legal series of orders to happen after you pass away. Megan and I created this document together and they name each other to receive our assets, but go further in the case of us passing together. This was an incredibly difficult document to compile because it discusses your death and also details the orders for our daughter and what would happen to her if we would pass. While it was difficult and scary, we wanted to have these thoughts legally written down, so that should this horrific situation occur, the parties involved know what we would like to happen.
Our will also includes our Power of Attorneys for health and financial direction, because those are large parts of this situation. We had conversations with those individuals to ask if they were willing to take on the requested role, but also to make sure they understand our wishes.
I understand that a will is not exciting, sexy, or easy to understand. They are essential to give direction for your family, children, or those close to you. Something that made our will very easy to complete, was doing it online through Mama Bear Legal Forms. This website creates wills that are specific to the state you live in. The cost for my will was $129 and you can add your spouse's will for an additional $70. We went with this online site instead of a local attorney to save on the cost of creating the will and because our current estate is not quite that large. This is a very essential expense, and something all adults need to have in place.
Life Insurance - The goal with life insurance is to replace the income of a family member who has passed. Again, a super scary item to think about, but life insurance sets your family up to be taken care of when you are no longer there to contribute to the household in terms of income. We utilize term life insurance, at a 20-year term, valued at 10-12 times our annual income. The goal with this would be that should one of us pass. the life insurance policy would pay out 10-12x our income and allow the other parent to continue raising our child without stresses of instantly becoming a single-income family. By investing this insurance policy money, it would produce roughly enough income each year to continue creating the amount of missing income, every single year, without reducing the amount initially paid out upon death.
To be clear, life insurance replaces income, or the expense to pay for items the individual who passed is no longer there to complete. The best example of this is a stay at home parent, who does not have an earned income, but provides many services to the household - childcare, cleaning, grocery shopping, meal prep, coupon clipping, etc. How much would it cost if they were not there? That needs to be determined.
For our life insurance policy, we entered our information into the Zander Insurance website, which is a broker and shops your health and situation out to other vendors to help you find the policy with the lowest cost. The term policy costs about $600-$800/year each, and can be paid per month. We consider life insurance an absolute must in our household. We purchased life insurance during Megan's pregnancy, but would recommend as soon as both incomes are necessary to continue lifestyle - mortgage payments, childcare, etc.
Starter Emergency Fund - I recommend saving up $1,000 as fast as you can as a starter emergency fund. Emergencies happen to all of us - car repairs, unexpected doctor visits, etc. If you have just $1,000 in your bank account, it will keep a barrier between you opening a credit card, or taking out a loan for something small.
3-6 Month Emergency Fund - After you have the $1,000 starter emergency fund, then pay off all your debts, besides your house, expand your emergency fund to what could cover three to six months of expenses. By doing this, it is likely that an emergency could be paid for with cash you already have. This prevents taking a loan, borrowing from family, using credit, etc. This will also make you feel different. I've noticed have a generally calm feeling knowing we have some money there if we need it if we lost our job or got injured and couldn't work.
Short Term Disability - This is something that most employers offer. This would be something that you can access if you have a work injury and you miss time at work, for up to 90 days. We actually don't utilize short term disability because we have our 3-6 month emergency fund. I wanted to share this in case you weren't familiar with it.
Long Term Disability - This is something that most workplaces offer, and some even include it as a benefit. This is something that I would recommend paying for if it is not provided for you, because it is going to provide some variation of pay to you should you become disabled or unable to work. It is likely a percentage of the wage you were earning and would kick in after 90 days of inability to work.
Identity Theft Protection - As someone who has been a victim of identity theft, I can't recommend this more. There are plenty of different places that offer this service. Again, we use Zander Insurance for this product and pay $145/year for our family. The amount of time that a person ends up spending to correct someone else's crime against you is outrageous. This company takes it into their hands and helps solve the crime - giving you tangible steps to correct it, or doing it completely on their own. They also have $1M worth of funds to replace any actual theft that happens.
Workplace Benefits - You need to review what your employer offers. Most employers offer some version of short term disability, long term disability, and life insurance. Remember, I'm only talking about 'defensive' products to have in your portfolio. You may not need or take them all, based on cost, but you should at least know and make educated decisions about these products.
And the winner is....
The winner of our January giveaway of Financial Peace University is Jason Husslein and his wife. Jason commented on the last blog with his current and future financial goals last month and was the chosen winner! Congrats to Jason and we look forward to his family's continued progress!
3-6 Month Emergency Fund - After you have the $1,000 starter emergency fund, then pay off all your debts, besides your house, expand your emergency fund to what could cover three to six months of expenses. By doing this, it is likely that an emergency could be paid for with cash you already have. This prevents taking a loan, borrowing from family, using credit, etc. This will also make you feel different. I've noticed have a generally calm feeling knowing we have some money there if we need it if we lost our job or got injured and couldn't work.
Short Term Disability - This is something that most employers offer. This would be something that you can access if you have a work injury and you miss time at work, for up to 90 days. We actually don't utilize short term disability because we have our 3-6 month emergency fund. I wanted to share this in case you weren't familiar with it.
Long Term Disability - This is something that most workplaces offer, and some even include it as a benefit. This is something that I would recommend paying for if it is not provided for you, because it is going to provide some variation of pay to you should you become disabled or unable to work. It is likely a percentage of the wage you were earning and would kick in after 90 days of inability to work.
Identity Theft Protection - As someone who has been a victim of identity theft, I can't recommend this more. There are plenty of different places that offer this service. Again, we use Zander Insurance for this product and pay $145/year for our family. The amount of time that a person ends up spending to correct someone else's crime against you is outrageous. This company takes it into their hands and helps solve the crime - giving you tangible steps to correct it, or doing it completely on their own. They also have $1M worth of funds to replace any actual theft that happens.
Workplace Benefits - You need to review what your employer offers. Most employers offer some version of short term disability, long term disability, and life insurance. Remember, I'm only talking about 'defensive' products to have in your portfolio. You may not need or take them all, based on cost, but you should at least know and make educated decisions about these products.
And the winner is....
The winner of our January giveaway of Financial Peace University is Jason Husslein and his wife. Jason commented on the last blog with his current and future financial goals last month and was the chosen winner! Congrats to Jason and we look forward to his family's continued progress!
Getting personal:
We went to our first Bucks game last Sunday! It was quite an adventure with a five month old. We made it through three quarters of the game, which included lots of photos, a meal, a nap, diaper change, and a large Bucks lead which made leaving early a little easier. Our daughter really does enjoy the movement during basketball and we love going to games. It is a lot different than going with just Megan and I, but it is a tradition we are looking forward to continuing! We sat with a friend and her kids, so it was a whole family outing!
For February goals, I've decided to combine two books for February/March as one was quite short and the other is a bit longer. Both books are on the subject of real estate, which is something we have considered getting into after we have our house paid off. This would create another source of income, and potentially something we would manage throughout retirement. This topic is at least 10 years down the road, but the more I can learn now, the more it becomes a reality later.
Roughly a year ago and this past Sunday
For February goals, I've decided to combine two books for February/March as one was quite short and the other is a bit longer. Both books are on the subject of real estate, which is something we have considered getting into after we have our house paid off. This would create another source of income, and potentially something we would manage throughout retirement. This topic is at least 10 years down the road, but the more I can learn now, the more it becomes a reality later.
If you're interested in getting an email when a new blog is published -
email Nick @ Nich.Phal@gmail.com
We are so excited for Financial Peace U! We have done Dave ish for too long and we’re ready to take it to the next level. Congratulations on your success with the baby steps! We can’t wait for the time to come for us to pay it forward.
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