After digging and pouring the footer for our house, it’s time to set our foundation.  Our financial foundation needs to be solid, stable, and able to support the weight of our financial house.

Three components of a solid financial foundation -

Insurance

At present, my wife and I have health insurance, term life insurance, disability insurance, automobile insurance, dental insurance, and renter’s insurance.  We also have an umbrella policy that protects us from events not covered by our renter’s or automobile insurance.  In the future, we plan to purchase long-term care insurance.

Ever few years, I review my policies with a qualified professional.  My wife and I believe in several ounces of prevention.

Debt Reduction

My wife and I really enjoy living debt free.  (It rocks!)  Our hope is that we can live the rest of our lives without borrowing money.  (We might make an exception for the purchase of a house.  At present, we live in a house provided by my employer as part of my compensation.  If I were to change jobs and we were to move, we would either rent or take on a mortgage, depending on what was right for our family at the time.  For the sake of this article, I’ll be speaking of non-mortgage debt.)

If you have high-interest debt, it’s time to get angry and do something about it!  Making minimum payments and dealing with credit card companies isn’t any fun.  Make a plan, eliminate your debt, and then move on to the really important things in life.

Emergency Fund

My wife an I have an emergency fund (roughly) equal to six months worth of expenses.  We built this emergency fund immediately after paying off our last debt.  The peace-of-mind it provides is priceless.  (While we were paying off our debt, maintained a smaller emergency fund between $800 and $2000.)  The amount in an emergency fund will vary, depending of family size, location, employment situation, and comfort level.  We sleep better at night, knowing that we have an emergency fund in place.

Pouring and setting a solid foundation can be back-breaking work.  Dealing with a financial foundation can be extremely taxing – mentally and emotionally.  I know, for me, it was overwhelming when we first began the process of getting out of debt.  I was embarrassed by many of the financial decisions I had made in my past and I felt somewhat lost as to where to begin.  Thankfully, I was able to connect with some good friends who had good advice and, little-by-little, I was able to make some very positive changes.

Go slow.  Understand what you are doing.  Keep things simple.  Move forward.

Start with a good, solid foundation – and the rest of the building will (almost) build itself.

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Our Financial House – The Foundation

An ounce of prevention is worth a pound of cure.

-Benjamin Franklin

Moving beyond the day-to-day management of my personal finances, it’s important that I think about strategies which will promote long term financial stability.  Lately, I’ve been thinking about insurance, end-of-life documents, and organization.  Mundane topics, to be sure, but it pays for me to focus on these areas now, so that I do not need to worry about them in the future.

End-of-Life Documents -

Let’s face it, it’s never fun to think about death – especially our own – but if you have a family, you need a will.  My wife and I updated our wills, with the help of our lawyer, back in July.  In the state of Georgia, the state recommends an advance directive for health care, which combines provisions of a living will and a durable power of attorney for health care.  Both my wife and I have filled out and signed a copy of this form.  I have also created a durable power of attorney, as has my wife.  We keep our end-of-life documents in a fire-proof safe.  We also keep copies of them off-site.

Insurance –

We have health insurance, term life insurance, long term disability insurance, renter’s insurance,  automobile insurance, and umbrella insurance.  At some point in the future, we will purchase long term care insurance.  Our life insurance policies are equal to twelve times our annual salaries.  We have renter’s insurance because we live in a home that is provided by my employer.  My employer insures the home, we insure its contents.  The umbrella insurance is a new policy, and provides for coverage above and beyond our renter’s and automobile policies.  The long term disability has a 180 day elimination period and our automobile policy has a very high deductible.  We have an emergency fund in place to handle most emergencies.  Our insurance is designed to protect us in the face of a catastrophe.

Organization -

I’ve really worked hard to improve my system for organizing documents.  I like to sort regular bills by date, and then by year.  I keep several years’ worth of bills in a closet, filed away should I need to reference them.  Important documents, like our wills, birth certificates, car titles, social security cards, and marriage licence, are stored in our fire-proof safe.  Copies are kept off-site.  I have three copies of our income tax records.  Two copies are here at our house, and another copy is kept off-site.  I’ve also digitally copied and stored several important documents.  As a precaution against fire or flood, I’ve video-taped the contents of our home, and I keep a copy of that tape off-site.

I’m hoping that some upfront-preparations will prevent down-the-road hassles.  I’m trying to take the necessary steps, now, so that I can relax and enjoy the future.  There’s no point in working hard to make money, and even harder to save it, if I don’t take the time to protect it.

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Several Ounces Of Prevention

A few months ago I hit a deer with my car.  After a little internal-debate about whether to have the car repaired or trade it in for something newer, I decided to keep the car and have it repaired.  I happy to report, the car has been repaired, and it looks great.

I have a high deductible – $1000 – and it felt a little strange writing a check for that much money for repairs on a nine year old car.  Thankfully, I actually have a budget-category, labeled automobile repair, from which I withdrew the deductible payment.

It’s so important, when creating a budget, that I remember unplanned-for expenses.  My wife and I own three automobiles, each with a $1000 deductible.  Instead of relying on our emergency fund, which is really there to protect us should one of us lose our job, we prefer allocate funds, on a monthly basis, for the specific purpose of paying our deductibles.  Each month $250 ($3000 / 12) is set aside, in my ING Direct Orange Savings Account.  Since the accident occurred last year, I used money allocated in 2008 to pay for the repairs.

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My Car Has Been Repaired

A few days ago, I called my automobile insurance company and informed them that a deer had hit my car.  The insurance adjuster just left, and he gave me an estimate of $2500 to fix the damage done to my car.

Now I have a decision (or two) to make.  Just a few days before the collision with Mr. Deer, my wife and I talked about selling my car (and my old pickup truck) and buying a newer truck.  I’d love to have a truck that was big enough to carry our whole family.  There are five us, and we can’t fit in my standard-cab F-150.

Out of pocket, I’m looking at a $1000 deductible to fix the car.  I really don’t feel like spending that much money, especially on a car that I might sell anyway, but I don’t want to drive around in a busted car, either.

Right now, I’m thinking about -

1.  Paying the $1000, having the car fixed, and keeping the car.

2.  Paying the $1000, having the car fixed, and selling the car.

3.  Selling the car, as is.

If I keep the car, I’ll keep the truck.  The truck will not sell for all that much, and I am not going into debt to buy the newer truck.  If I sell the car, I’ll also sell the truck.  I’ll take the money I make an put it towards a newer truck.

I’ll let you know what I decide.  Right now, my gut tells me that I’ll just pay the $1000 and keep the car, but I think it’s worth running the numbers, just in case I can find a good deal on a used truck.

Click here to read about how I paid cash for our minivan last year.  I’ll use a lot of the same techniques when / if I decide to buy a newer truck.

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The Insurance Adjuster Has Given Me An Estimate

Last Friday night, while driving my daughter home from gymnastics practice, I hit a deer with my car.  (Technically, the deer hit my car, too.)  My car suffered some damage to the right front fender, and both passenger doors.  The car’s passenger-side mirror was destroyed.

Thankfully, my daughter and I are find.  I’m not able to say, with any level of certainty, that the same is true for the deer.  After the collision, I kept driving until I could find a safe place to pull off of the road, and I never saw what happened to the deer.  I hope the deer is okay.  I’m fine and so is my daughter.

I called my insurance company’s claims department they should process the claim in a day or so.  We’ll need to dip into our emergency fund (or use money from our miscellaneous budget category) to cover the deductible amount.

I’ll let you know how things pan out – and I’ll even post some before and after photos.  I would have had some shots for this article, but I actually drove the car to my wife’s school this morning, and brought her van home.

On a much happier front, I’m down 17.2 pounds!

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Hit A Deer

I’ve just gotten off the phone, after thirty minutes, wih our health insurance company.  It seems that they, for some strange reason, have been filing all of our most recent claims as “out-of-network” instead of “in-network”.  So, instead of charging us 10% for each visit to the doctor, they have been charging us 40%!

Spending thirty minutes on the phone with an insurance company is never pleasant, but, I did manage to find a very competent representative and she quickly explained that the mistake was on “their end” and not “mine”.  Taking the time to review several Explanation Of Benefits from my insurance company and several bills from our doctors proved to be beneficial – to the tune of saving $208.34.

Remember, if you receive a bill for a service, and you don’t understand it, make a phone call.  Do not give up until you find someone who can and will thouroughly explain each and every charge.  Before I hung up the phone, we went through every single claim from 2008, just to make sure that this had not happened earlier in the year.  Thankfully, there were only problems associated with bills submitted in the past two months.

I have already put it on my calendar to call back in a month, just to check in with them.  Hopefully, all issues will have been corrected.

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The $208.34 Thirty Minute Phone Call

According to The Atlanta Journal-Constitution

Georgia’s largest health insurer (Blue Cross and Blue Shield of Georgia) sent an estimated 202,000 benefits letters containing personal and health information to the wrong addresses last week, in a privacy breach that also raised concerns about potential identity theft.

Please click the link above to read the entire article, but it appears that the letters contained not only medical information but some also contained social security numbers.

Georgia’s Office of Insurance and Fire Safety Commissioner John W. Oxendine posted this web alert with more information – including contact numbers – for those who have questions about this situation.

For those worried about identity theft, you might want to consider submitting a fraud alert (security freeze) to each of the credit bureaus:

Click here to submit one to Equifax or here to submit one to Experian.  TransUnion does not have an online form for submitting a fraud alert, but you can click here to find their contact information.

(Back in October, I lost my wallet and submitted a fraud alert to Experian.  According to their site, they notified the other bureaus for me.  I’m not sure if they still do this.  So, if you file an alert at their site, and they tell you that they’ll notify the other bureus, leave a comment and let me know!)

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Medical Data And Social Security Numbers Exposed By Insurance Company

We’ve just returned from our attorney’s office and we are the proud owners of two, shiny new wills! 

I thought I’d share a little about how my will is structured -

If I were to die, my wife becomes the executor of my will and all of my assets would go to her.

If both of us die, at the same time, all assets go into a family trust.  We named an executor and a trustee.  (In our case, the executor and the trustee are the same person.  But, we could have named an executor – the person who carries out the details of the will, and a trustee – the person who manages our assets.)  The executor carries out our wishes, as detailed in the will.  The trustee, in our case, manages our assets for our children, until such time as they are able to manage those assets for themselves.  In our case, we asked the trustee to divide our assets into three portions, one for each child, and distribute those assets to our children once each child reaches a certain age.

We also made provision for the care of our minor children, should we both die at the same time.

I have to tell you, it felt very weird to be signing my will.  (Note:  I actually already had a will, and so did my wife.  But, I had written them myself and I was always worried that they wouldn’t stand up in probate.  That’s why we decided to go to an attorney.  We wanted more peace of mind.)

I should receive the bill for the wills in a few days.  Once it arrives, I’ll let you know how much they cost.

As soon as we left the attorney’s office, I went to an office supply store and purchased a fire-proof, water-proof, storage chest.  Now, our wills and our other important documents are safe and secure.

I’m only 33 and I hope to live for a long, long time.  But, I don’t want to die and leave my kids with an uncertain future.  Now, I know that they’ll be taken care of and I know that my wishes will be known.

Side note:  As I’ve stated many times before, I am NOT a financial professional.  I’m just writing about what I have done.  I strongly suggest that you seek professional advice before making any financial decision – especially one as important as the structure of your will.

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How My Will Is Structured

I’m on a roll.  Here’s what I’ve done today.  (No more procrastinating…)

Term Life Insurance – I went online (to insure.com and zanderins.com) and got quotes for two term life insurance policies, one for me and one for wife.  I chose 20 year level term policies that equal 12 times our annual incomes.  (We already have two term life policies, and we may or may not choose to keep them, once the new policies are approved.)

Disability Insurance – Again, I requested quotes and applications from zanderins.com.  The applications should arrive in the next few days.

Wills – I spoke with my attorney.  Tomorrow, at 11:00 AM, my wife and I will sign our new wills.  Tomorrow night, I’ll sleep soundly.

Renter’s, Automobile, and Umbrella Policies -  Right now, I have sufficient Renter’s and Automobile coverage.  But, I have my policies with two separate companies.  I’m looking into moving those policies to a single agent – and then obtaining an Umbrella policy.  Tomorrow, I’ll contact both of my agents and see what each offers.  (I might end up canceling both policies and going with an entirely new agent, if need be.)

Organizational Steps -

I spent some time today organizing several of our important documents.  I put our marriage certificate, the kids’ birth certificates, and our income tax returns in a safe, secure place.  I also made copies of all of our insurance policies.  Tomorrow, I’ll put a copy of our new wills in the same place.  And, I updated our list of accounts.  (I update this list two or three times a year, so that my wife will have easy access to our current financial situation.)

I’ve done all that I can do for today.  Tomorrow, we’ll sign our new wills and I’ll call both of my insurance agents.  It feels good to get the ball rolling and it will feel even better, once all of my bases have been sufficiently covered.

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Updating My Will And Purchasing More Insurance

Alright, I have procrastinated long enough.

A few months ago, I went to a lawyer and had him draw up new wills, one for me and one for my wife.  But, even though I have them sitting in a folder in a filing cabinet, we haven’t signed them.  So, tomorrow, I’m going to call his office and my wife and I are going to make them official.  Why have I waited so long?  Shear laziness?  How does that sound?  Sadly, it’s the truth.

I also need to revamp my current insurance situation.  Tomorrow, after meeting with the lawyer, I’m going to visit my insurance agent.  I need to increase our term life coverage, rework my automobile insurance coverage, purchase long term disability, renew my renter’s policy, and talk to the agent about an umbrella policy.

I’ve put these changes and upgrades off for far too long.  Right now, we have minimal coverage.  By the end of the week, we should have substantially more coverage and I’ll feel much better.  I should have taken care of this a long time ago.  But, there’s no need in beating myself up about it.

Do you procrastinate?  If so, why?  If not, how do you avoid it?  Like a kid putting off a term paper, I find that I procrastinate – mainly when I’m unsure of the next step to take.  So, foolishly, I just do nothing, until, in a panic, I have to deal with the consequences of my procrastination.  Silly me.

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Insurance Worries And My Need To Stop Procrastinating