When to Start Buying Life Insurance?
By Dave Ramsey
author, The Total Money Makeover
What’s the minimum age at which you recommend buying life insurance? I’m 27-years old and married, no kids and we’re doing pretty well with our debt-reduction. Currently, we only have $10,000 in debt remaining and this includes some student loans and a mortgage.
Sheldon in Salt Lake city, UT
You need life insurance at this point. Your wife’s current lifestyle is dependent on your income, and you want her to be well taken care of financially if something should happen to you. The need may not be quite as pressing as if you had children, but it would be bad if you died prematurely and she found herself saddled with a bunch of debt on top of that.
At your age, life insurance is not very expensive. If you’re healthy, you could get around $400,000 in coverage for $25 or $30 a month. You’ve got some responsibilities to think about, my man. Good, level term life insurance is something you need to look into.
When you make good money, what’s the emergency fund limit?
We make $100,000 a year. How much money should we have in our emergency fund?
Debbie in Louisville, KY
You should have anywhere from three to six months of expenses in your emergency fund. Keep in mind I’m saying EXPENSES, not earnings. If you spend everything you make, that would be a minimum of $25,000. If you don’t have any debt, and it takes you $3,000 a month to live, then you’d be looking at $9,000 to $18,000 in your emergency fund.
Remember, too, Debbie, that your emergency fund is not an investment, it’s a barrier to help absorb the blows when life comes knocking. Remember Murphy’s Law, and how it says that if something CAN go wrong it WILL go wrong? Having your emergency fund in place is great Murphy Repellant. When you’ve got a fully-loaded emergency fund, it can turn a disaster into nothing more than a minor inconvenience.
Too many jobs?
I work too many jobs. I’ve got some rental houses, and I run a mail route six days a week. I grew up on a farm, and I still farm, plus I’m the minister of a small church. I’m trying to sort these things out and decide how to free up more time to work in the ministry. I’m not sure what to do.
I would spend some time thinking and praying. Ask God directly what he’s calling you to do for this season of your life. Once you’re called into the ministry, then you’re in the ministry. But one of the questions we’re looking at here is this: should this be the season in which you continue to do this kind of church work? Lots of ministry work is done outside the church, or at least it should be.
Plus, you’ve got to be having fun. You’ll be having fun when you’re doing what you were designed to do. Let me ask you a question, Damon. If you had a clean slate, no obligations and unlimited money, what would you do? Now, I’m not talking about sitting on the beach and forgetting the family. That’s not an option once you have the responsibility in place. I’m talking about a kind of work that you’re going to fall in love with and completely pour yourself into. If it’s being involved in rental properties and real estate, fine. If it’s dumping the rental properties, mail route and farming so you can concentrate on the ministry, that’s great, too.
Think it over from that perspective, but I’d say one or two of these things needs to disappear within the next six months. If not, it’s going to start eating you up inside.
Dave Ramsey is the bestselling author of The Total Money Makeover.
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