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You’re the picture perfect example of a financially responsible person. You live below your means, max out your retirement accounts, have a nice emergency fund and even some investments. You’ve got life by the reigns and every month your net worth goes up and your debt goes down. Your living the American dream. Before you get too content with your progress, know that these 8 big "landmines” can ruin the best laid financial plans. This article will help you understand, plan for and hopefully avoid each of them.
This is an extensive and important article on a topic that few tend to discuss. It's more like a collection of 8 articles, so utilize the article index or feel free to view all pages.
Nobody likes to talk about death. There’s something morbid in even planning for it, but if you want to be responsible to your loved ones, take contingencies against early death and do it early in life. Statistically, you're unlikely to die during your “vulnerable” years: those years where we have dependents that rely on our earnings but we haven't accumulated enough assets to support them. For most families, the vulnerablility starts with the first child and ends when they are debt free and have enough assets for the surviving spouses to carry on without their partners. Typically, this period usually lasts about three decades - somewhere from your mid twenties to mid fifties. Once the kids are grown up, they fire up their own income machines and your spouse can either work or manage to live off the nest egg you have built up together.
Avoiding It: Refuse to die early. Look at the leading causes of early death: Heart attacks, cancer, accidents, diabetes. While there are genetic factors involved with the diseases listed, you can greatly reduce your risks by exercising every day and eating better foods. According to a recent report, 77% of all adults are inactive and 58% are overweight. Do yourself a favor, if someone depends on you, keep your weight down, don’t smoke, and take it easy behind the wheel, you’ll greatly reduce the probability that you exit Planet Earth early.
Planning For It: Get term life insurance early in life. The earlier you get it, the cheaper it will be. Because life insurance rates are based on risk factors and insurance companies compete vigorously for your business, premiums are fairly low when you're young - as little as a few hundred dollars a year for $500,000 of coverage . A good technique is to start with a smaller policy in your twenties that will give you good protection and then lock in a bigger 20 year policy when you are in your thirties. Rates in you early thirties are still inexpensive and it will carry you all the way to your fifties after the kids are on their own and your house is paid for. If you wait till later in life the cost of a policy becomes prohibitive and it's more likely that you won't qualify for the best rates. Shop around and use the Internet to get the best rate from a reliable insurance carrier.