Q. Iâm getting married this summer, and Iâm on Baby Step 4 of your plan. My fiancee is getting onboard with your advice, too, and sheâs currently in the process of paying down her student loan debt. Would it be a good idea to go ahead, and put most of my emergency fund savings toward helping pay off her debt now?
A. Youâve got a generous heart, and I know you love this lady, but I wouldnât recommend being involved in paying any of her debt until after the wedding. At that point, you two are joined together as one, and the concepts of âmineâ and âhersâ and âhisâ disappear. It all becomes âours,â and you can adjust your money situation to reflect your marriage and your financial makeover as a couple.
Make sure that âweâ have an emergency fund of at least $1,000 in the bank at that point. Then, if youâre both in agreement on the issue, you can throw the rest of what you previously had in your emergency fund at the debt. Both of you can also pile up cash between now and the big day, so that when youâre âofficialâ youâll have even more cash on hand.
Congratulations, and may God bless your lives together!
Q. My husband and I are 24, weâre debt-free, and weâre just a few weeks of saving away from having a fully-funded emergency fund. Each of us has a 401(k) plan at work, and right now weâre concentrating on life insurance purchases. You always recommend term insurance, but how long should the coverage last?
A. Congratulations on being super smart with your money! It sounds like you two are starting out on the right foot.
Generally, I recommend 15- or 20-year level term policiesâunless you have children. Since you didnât mention any kids, I can only assume theyâre not in the picture at this point. However, if you two decide to grow your family in the future, Iâd advise converting those to 30-year term policies. Youâll want the insurance there to protect everyone in the family, until the kids are grown and out on their own. In the years after, continued saving and wealth building will lead you to a point where youâre both self-insured.
You two have done an excellent job with your finances. Keep up the good work!