Life Insurance: How Much?

I know I need more life insurance. I've been planning to get more ever since we bought a house last May. I have a few reasons that I've put it off, but I know I should stop making excuses and do it!

We aren't completely without life insurance at the moment. I have a little more than twice my salary from work. My pension also provides a death benefit that would be about $1,500 a month to my wife. Finally, there would be a small amount of social security that my wife would collect as well. If you add that all up it is in the ball park of $200,000 plus $1,500 a month. That is enough to pay off all of our debt (including the mortgage) and leave my wife a little money each month to get by.

Based on what I have already, I know we are currently ahead of many people out there. However it certainly isn't enough to replace my income. I'd say that it would cover about 40% of my current income and that would leave a lot of strain on those I may leave behind. I'd prefer to be able to cover the mortgage and then leave 80% of our current income less what would have gone to the mortgage. That may seem convoluted. Instead, here is how it works out.

Current Income	$80,000
COL Reduction w/ One Person	80%
Wife's Income	-$10,400
Mortgage	-$15,000
Current Death Benefit	-$18,000
Total Shortfall	$20,600
Annuity Rates	5.6%
Insurance Needed	$365,507

And there we have it. I currently have about $365,500 less life insurance than I need to provide for my wife. Doing a similar calculation based on having children in the future, I will need to add an additional $500,000 per child to help with the costs of raising children and the expense of putting them through college.

Now that I know how much insurance I need, I am that much closer to getting it done. My primary stumbling block at the moment is the hope that my current workout regimen will bring my weight down enough so I can get premium pricing. Based on the quotes I have received this coverage comes in at $390 annually for "super preferred," $462 for "preferred," and $882 for "non-tobacco." I think I may just have to bite the bullet and buy it now even if I don't get the "super preferred" price, and then try hard to lower my premiums through a healthier lifestyle.

I'm currently planning several articles on the topic of insurance. I'll update you on my progress with life insurance and cover other topics like disability insurance and maybe a bit about health insurance. Subscribe to my RSS feed to check back later for more posts. Thanks for reading.

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Wedding Season Has Arrived

Today I got my fourth wedding invitation in the mail today. Three of my friends and one of my wife's are getting married this Spring and early Summer. I have responsibility to be an usher at one, but so far I don't have any mandatory tux rentals. Still, the travel is certainly going to add up and we aren't going to have very many free weekends once this starts. I think it might be a bit much.

Going back to my post a few days ago, Gift Spending: Am I Cheap?, there will also be lots of gifts to buy. Some of these friends have been out on their own for several years now, so they don't necessarily need the basics like pots, pans, and kitchen appliances. I don't like to buy gifts that never get used either. I think this may be an occasion where a $30 gift card for each lucky couple is useful and appropriate. Sound reasonable?

I also need to get my out of shape self to straighten up my diet. My suit was a tad tight last time I tried it on, and that was probably 15 pounds ago. It is a nice $300 suit and I certainly can't afford to buy a new 'fat man' suit. A financial incentive should keep my going to the gym 3-4 days a week but I'm not sure if it will be enough to keep me out of the chocolate chip pie my wife baked last night. Yum!

The next task is to fit these costs into the budget so I can save up for them right? I'll let you know in a few months how successful I am with that task. Love is in the air, but dollars don't grow on trees.

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Round-up: Cupid Edition

Last night my wife and I had our special evening together for Valentine's Day. I cooked a red wine fondue. It involved a lot of chopping veggies and cutting meat into cubes that were put onto skewers and cooked in a boiling mixture of wine and beef stock. Very yummy.

I also gave her two sets of coupons as a gift. The first set of 13 tickets are redeemable for "Blog Free Nights." My wife supports my blogging, but there are times that she needs me to pull myself away from the computer. Blueprint for Financial Prosperity posted recently about the Five Languages of Love. I know my wife needs attention to know she feels loved and that isn't always my strong point so this way she can remind me when she is feeling short changed on my affection.

The other coupon book I found online, I've lost the link now, and each coupon is an activity for us to do together. One is a day of cuddling, another is a picnic, and another is a romantic dinner out. In all there were about 15 of these activities. Some are going to be nearly free and others will be fairly expensive. The total value of all of the coupons may even be $500, but used over the course of the year it will be a great way keep up the romance.

There were a ton of great posts around the blog-o-sphere this week about Valentine's Day so I'll give a quick round up of some:

• Cheap Way to Say "I Love You" from Get Rich Slowly
• 6 Tips to a Frugal Valentine's Day from Consumerism Commentary (slightly tongue in cheek)
• Of Love and Money from Wise Bread
• Every Day is Valentine's Day from Clever Dude

Aspire 2 Wealth was also featured in the Carnival of Homeowners this week. You should check it out. Thanks for reading. Enjoy your President's Day weekend!

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Gift Spending: Am I Cheap?

First, let me start off by saying, "Happy Valentine's Day."   My wife and I have decided to postpone our V-day celebration until tomorrow, so for me today is just another day.  It will allow us to make our celebration a part of the weekend and enjoy the special day a little bit more.  It will also let us have the house to ourselves for a whole night without interruption.

When I start thinking about Valentine's Day the first thing that comes to mind is flowers, chocolate, and other gifts.  In my attempt to be responsible with my money I would prefer to minimize the emphasis on gifts and instead spend romantic time with my wife.  I don't like to buy flowers; they die.  I don't like to buy chocolates; they are consumable.  I don't like to buy other gifts much either!

Okay, so am I a jerk or what? 

In my family gifts were approached very gently.  My parents gave us gifts twice a year, birthdays and Christmas.  We did other special things for the minor holidays but not presents.  The gifts were not particularly lavish and not particularly stingy; $100 range for birthdays and $300 range for Christmas.  We were middle to upper-middle class and this seems reasonable to me still. 

In some years it would be a little more or a little less in order to fit the circumstances.  I know that the year my brother asked for a telescope my parents went all out.  Mom taught astronomy at the community college level and this was a veiled excuse for her to indulge.  I'm pretty sure they spent $500 that year for my brother's main gift, but in a way it was also a gift for the rest of the family too.  When my wife and I were getting ready to buy our house my parents gave us a very generous Christmas gift to buy furniture for the house.  In other years it is much less.

Our family did not stress gifts between siblings or from the children to the parents.  These gifts were normally either hand made or bought for less than $20.  We also did not buy gifts or expect to receive them from our extended family.  Most years (but not all) my grandparents would send between $10 and $20 for these occasions but never more.   As we got older and outgrew the traditional children's birthday party we did not exchange gifts with our friends either.  A phone call, card, or more recently an email, IM, txt, or Facebook poke is all that we might expect; even then it was not a big deal if someone forgot.

Now that you understand my background you might begin to understand why I feel that gifts are such a minor part of celebrating birthdays and holidays.  I never felt that there was anything wrong with this approach until my wife and I got engaged.  Her family is completely different.  Gifts are expected from each member of the family on a birthday and everyone buys everyone else gifts for Christmas.  My old Christmas budget of $50 for family gifts is now more like $500!  In her family, the price ceilings for each gift are about double what we ever spent in my family.  Each side of grandparents gives everyone $500 each year for Christmas and $250 for a birthday!  That is several times what I ever got. 

My wife also has a tradition of exchanging gifts with her closest friends on their birthdays.  She normally spends around $25 but if there is something special that catches her eye or if it is a milestone birthday like 16, 18, 21, 25, ... $50+ would be in the range of possibility.  My wife is a wonderful generous person and I love it, but getting accustom to her approach to gifts has been a difficult transition for me.  I feel like a cheapskate.

I'd like to hear what others think about gifts and how their family approaches the topic.  Thanks for reading.

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Diapers and 529 Plans - Scary Stuff

I've been reading a great series of posts from the members of the M-Network called Money Matters for All Ages. The posts go through the major life phases and for each provide financial advice and insight. I read the two posts related to being in your 20's, but I found that it did not really resonate with me. I think it may be that I "got out of the blocks" rather quickly in my life. Before turning 25 I was married, finished a masters degree, and bought a house. My income has surpassed the median household income for someone with an equivalent education, and I have a positive net worth. I've not done everything right (*credit card debt*), but my financial life seems very different than that of the average 24 year old.

When I read the two posts about being in your 30's they hit me like a ton of bricks. For reference (and a good read) they are The Chaotic Thirties and Personal Finance Advice for Your 30's. Immediately I saw strong similarities between myself and the two writers. Marriage and buying a home are game changing decisions that are wonderful improvements in your quality of life but can also be massive liabilities. Part of succeeding in your 30's (or 30-at-heart) is making sure to choose wisely. I would also add that success in both endeavors hinges on this bit of wisdom, "the love and elbow grease [that you put into them] will be returned 2-times over but neglect will ruin them." This advice was shared with me by someone much older and wiser than me (keep it in mind as Valentine's Day approaches).

I also feel the tide turning in my debt situation, and the train has started building steam in my savings. I am starting to think about what will be needed to make the next big leap in my career, into a management position. It all felt very familiar and easy to relate to when I read about these 30-somethings lives. However, one thing was completely alien to me and honestly made me start to worry.

Kids!

The idea of having children scares the crap out of me. Before you start thinking that I'm some kind of self-absorbed child-hater, I do want to have children. When I think about holidays or special occasions I see them as family activities. I can't imagine being in my 40's or 50's and not have a house full of family with which to gather. There are at least a dozen other reasons that I can think of that motivate me to have children, and my wife feels the same way. The only problem is I don't know how to fit it into the budget.

I feel that there are certain responsibilities that a parent has when they bring a child into this world. They are the things my parents did for me and my grandparents did for my parents. While I don't look down on people who make different choices about the type and amount of resources that are devoted to their children, I know that I will be disappointed in myself if I do not meet my own standards. The largest of these financial obligations I feel for my (potential) children are:

1. Their Own Bedroom in the Family Home
2. Reliable Transportation (eg late model used car at age 16)
3. Full Tuition, Fees, & Shelter for Undergraduate Studies
4. One Educational Trip Abroad
5. Fees and Equipment for Extra Circular Activities (sports, music lessons, scouts, ...)
6. Allowance Corresponding to Age & Household Contribution (chores)

In other words, I feel there is a financial obligation I have to my children in order for me to feel I have "done it right." The challenge is that none of this comes cheap. Right from the get-go there are cribs, changing tables, and tons of diapers. This, far more than retirement, seems like a nearly insurmountable expense. How will I manage to fund a 401(k), Roth IRA, sizable mortgage, AND a 529 plan?

To quote the blog Credit Withdrawl, "The transition from a Dual Income No Kids yuppie power couple, pulling down [relatively] huge amounts of money, to the Single Income, Two Children, Oppressive Mortgage," is about the only financial thing these days that gives me heartburn (pass the TUMS).

None of my concerns change the fact that compared to everything else I have accomplished in my life being a parent will be far more rewarding. I have resolved myself that when my wife is ready to start having children, I'll dive in head first and do the best damn job I can. I know that if I wait until my spreadsheets say that I've got my money situation just right it will never happen. It just scares me A LOT!

Any comments, suggestions, or hate mail is welcomed. Let me know what you think!

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My Holiday Recap

Christmas has come and gone till next year. It was an INSANE time here and I'm sure it was the same for most others too. We drove about 1000 miles and spent time with nearly all of our family. We also got some really nice gifts, and the gifts we gave seemed to be well received.

We got a nice mix of books, ornaments for the tree, and clothes. I was totally surprised when my parents gave me a 16 Gig iPod Touch. It was something I would never have bought myself so it made it that much cooler to get one. My wife got a Kitchen Aide mixer that she had been drooling over for months. We also got a fairly significant sum of cash that will refill the coffers and allow my wife to buy a bunch of new clothes that she needs (for a new work wardrobe).

Of all the things we did during our Holiday, I think we had the most fun playing an assortment of board games with our family. My wife and I picked up a couple new games that ended up being big hits. Crainium and Catch Phrase were both new purchases that definitely were worth the money spent. My mother-in-law also picked out two award winning games that we had never tried and gave them as 'family gifts'. Blokus was perfect for the analytical types like me and Quiddler was one of the best word games I have ever played. It was like a mix between Scrabble and Rummy, and even though I am a terrible speller I did pretty well. I think all four games will certainly be played again (and again).

I spent the whole week away from the computer and Aspire 2 Wealth. While I was gone I was included in the Carnival of Personal Finance hosted by The Digerati Life. It was a great set of Holiday Themed articles that you should check out. My wonderful wife also let me know not too subtlety that she was jealous of the time I've been spending on the blog (at least 2 hours every night after work). I missed the site over the break so Adfecto is going to keep on blogging, but I think in the future I will slow down a little bit and post 3-4 times a week instead of pushing hard for my original goal of 7-8 posts per week. I am all about balance in life and this will be no exception. Till next time... thanks for reading.

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Help! My Spouse Hates Personal Finance

I've tried hard throughout the last two and half years (since we got engaged) to involve my wife in financial decisions and regular checkups on of our finances. It hasn't worked. In fact, it wasn't until my wife and I started dating seriously (when she was 19 years old) that at my urging, she got her first bank account of any sort. I couldn't believe it, but she kept all of her money in cash hidden in a book until she was a college sophomore.

Today I completed my monthly net worth tracking. As I always do after I update our marital balance sheet, I brought up the topic to update my wife. My darling wife's eyes immediately glazed over. She hates numbers, math, and budgets. She hates that when she asks to spend money I almost always respond, "sure, just remember we only have X dollars in the budget for that type of purchase this month." The concept that buying something now curtails her in the future tends to frustrate her. When the topic of money comes up she immediately changes the subject or says, "Baby, that's your AREA." In short, my wife HATES personal finance.

Thankfully we don't fight about money. She has struck a bargain with me that so long as she always has what she needs and a few of the things that she wants the rest is up to me. We have talked deeply about what we consider needs and wants and on that we agree. We also have talked about big ticket items like cars, houses, and children and we agree on them as well. My wife is fine to remain completely in the dark about our immediate financial situation. This allocation of responsibility initially made me uneasy but I'm now convinced that this is exactly how she wants it and it will never change no matter how many budget meetings I try to have. It works for us, but I don't know about anyone else. I still worry about what would happen if I were ever in an accident, I've even considered putting life insurance into a trust to care for her so it requires no budgeting or investing on her part. Is that too much? I don't know.

Here are a series of articles and blog postings dealing with couples and personal finance. I hope that the advice presented can help you and your spouse share your financial lives together in harmony.

• Twelve Important Things To Talk About When Your Relationship Gets Serious
• How to have a Successful Budget Meeting with Your Spouse
  
• Money & Relationships (2) How to Stop Fighting over Money
• Questions On Talking About Money And Relationships, Answered (Part 1)
  

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