In my last post I talked about how I was able to not only restore our Disney fund but send in a huge tithe AND pay off almost 20% of my credit card debt. You may wonder HOW I managed to do that, given the fact that I talk all the time about attempting to reduce our monthly bills.
The answer is easy: life insurance.
Denis and I both have life insurance that we got in 2000. We got two policies – one whole, one term. We’ve been paying diligently on both policies since they were created. Combining the whole/term the deceased spouse would have enough insurance to pay off the mortgage, pay off all debts, pay for the funeral expenses AND have enough left over to enable the other spouse to raise the kids on a single income for quite a while. College wouldn’t be paid for, but at least they’d have a roof over their heads, clothes on their backs and food in their bellies.
And I was perfectly content to pay for those policies, until I read a very interesting article series on a blog I read about personal finance. The author talks about investing the premium differences and getting a much larger return on his money for the same number of years invested in a whole life policy. From MY perspective, given the fact I’m looking at ways to clear out my consumer debt IN ORDER to be able to invest in our future, the thought of trading our whole policies for term sounded intriguing.
By trading in the whole life policies, we were guaranteed an influx of cash because of the refunded premium payouts we would both receive. But our insurance coverage would remain the same. AND we’d have the added bonus of reducing our total life insurance premiums by about $50 EACH per month. Again, for the SAME dollar amount of coverage.
So we did it. I called our life insurance company and asked to trade our policy from whole to term. By keeping the dollar amount the same we were not required to re-take the medical exams we took in 2000 (which I’m VERY grateful for since I weigh more now than I did in 2000). Effective April 16 our premiums will save us an additional $100 per month in expenses. Effective TODAY I received my whole life policy premium refund and when combined with my job’s flexible spending account deposit made this week, I was able to send an entire 3-months’ worth of tithing, pay almost 20% of my consumer debt AND restore our Disney fund.
With Denis’ premium refund, we will be able to replace our water heater, pay off ALL of his consumer debt, put a significant portion into a 12-month CD for guaranteed savings, AND put some into the kids’ savings accounts (we’d put it in their 529 plans but they both took a MAJOR hit in the last quarter and I’m loathe to throw away any money due to the economy – so we’ll just put it into their savings accounts until the 529s are back on an UPWARD direction).
And, once all this is done, we’ll finally be in a position where we are not living paycheck to paycheck AND can actually afford to pay off the rest of my consumer debt a little bit faster AND put a little bit of money into savings each month. And Disney? Will still be a LOT of fun and CASH-ONLY.