Plan along with me

by Nick on July 30, 2010

I’ve come up with a list of items I want in my financial plan to reach my goal (financial freedom for me and my family – we’ll define that later) and to survive my passing (hopefully a long time from now).  Some of those things I already have.  Others I do not.  Some are required by law for me (car insurance for example).  Others are just part of my plan (life insurance for example).  Follow along with me as I complete my financial plan.  I’ll post a more detailed list later and my target/guideline for each. 

Sneak preview – term life insurance:
I have it.  I have ten times my pretax annual income.  I have a thirty-year term.  Why did I get it?  Short answer: I have a wife and one-year-old son that I want to provide for if I pass away.  Why a 30-year term?  Because I may have more kids and I want the term to last as long as it will take to get all of my children through college age.  Why ten times my annual income?  Because it’s not the lottery.  That’s enough for me.  It made sense for me.  Invested conservatively I believe that amount could provide living wages and college costs for one or two children and, along with other assets, I’m comfortable that my family would be fine.

What happens after thirty years?!?!  After thirty years, I’m expecting to have more than enough saved to take care of my family if I pass away – I’ll be self-insured.  So the plan is that in thirty years I will have at least ten times my current salary saved as the SAFTM Life Insurance policy.  So the day after I got the policy I had ten times my salary.  And after thirty years I will no longer have the policy, but I’ll still have ten times my salary.  This is the great whole v. term life insurance debate.  Term was right for me.  We’ll talk more about that decision later.

What do you have in your plan?  How much life insurance is enough?  Do you have life insurance.  How much?  What kind?  What about a will?  Living trust?  401(k)?  IRA?  We’ll get into all of those and what was right for me.

Until next time – slowly put the credit card down and step away from the mall!

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