Like you, I’m a massive fan of the net worth statement. Every month, I religiously complete a monthly investment income spreadsheet along with a net worth statement. I actually can’t stand the idea of falling behind on these crucial exercises in the run of a month and I get crankier by the day upon the arrival of a new month until they have been completed.

I think the last point you mention regarding estate planning is often overlooked by many. Although drafting wills and planning for the management of your assets upon death can sometimes be less exciting than watching paint dry, it doesn’t mean it’s not important.

Boomer & Echo posted an article earlier this week mentioning how 50% of people die without having an estate plan in place. That’s a huge number IMO.

Great post.

As for insurance, the “lottery” is not in protecting a specific financial loss — if an insurance-triggering event occurs, then financial loss will not be incurred. The “lottery” is the event itself — eg. what are the chances of your house burning down? Insurance is more akin to lottery hedging.

The difference is in the purpose. Lotteries are an attempt to create wealth where none was before. Insurance is an attempt to protect a specific financial loss.

If you die,and don’t see any financial loss, then yup, insurance is a lottery.

Except for many of us with dependents, the financial loss at our death is our income. the insurance benefit at that time isn’t a creation of wealth out of nowhere, it’s simply replacing the lost income, the paycheque that disappeared at our death – ideally dollar for dollar.

PS – what you are really referring to is what the industry calls “regular occupation”. “Own Occupation” is designed for highly specialized occupations

“I also don’t buy into the whole insurance thing myself,”

I took that to mean you were talking about whole life insurance. Are you saying that you don’t buy into any type of insurance, or just life insurance, except for instances where you make disparately more than your spouse?

and then added

” but could see it as a good idea if you are the sole breadwinner in the family or if you make more money than your spouse. ”

Other than that my point is still “that life insurance is good.. for insurance companies shareholders.”

RJ, i’m with you. Insurance is not about winning the lottery, it’s about protecting dependants.

No matter how big your investment portfolios you will always have a need for insurance. Sometimes people don’t understand it fully, it is used as a MAJOR tax relief by wealthy people.

The two largest policies are owned by the two richest men in the world Bill Gates and Warrent Buffet. They are worth over $60 Billion each I am sure they have enough money to consider themselves self-insured but they understand insurance.

For me my top priority is first achieving my emergency fund. Once I’m done with it, then I can start with the other items.

Having an emergency fund will protect you from unpredictable events in your life. Plus the piece of mind having known that you have such fund is ideal.

@MGL
totally agree with you. In my dad’s case his father passed away without insurance leaving my father the head of household at the age of 14. A lot of his life was put on hold helping provide for and raise his younger siblings. I sometimes get a feeling he dislikes the youngest for that reason.

MDJ, When you say “Get your credit report and check your credit score regularly.” what exactly is regularly? Most experts advise once a year …

The purpose of term life isn’t to provide a windfall, it’s to ensure that those left behind can continue to enjoy a similar standard of living. Most families live a lifestyle based on certain income expectations, and the sudden loss of a breadwinner could mean that their lifestyle would no longer be sustainable. While investments can be liquidated, this means that they can no longer be used for their original purpose, whether that is retirement, education, financial independence, etc.

The same can be said for disability insurance- would you really want to find yourself disabled for a period and have to deplete your retirement savings to pay for daily living expenses, and then have to try to rebuild your funds if/when you return to work?

Term life and disability are generally inexpensive and I find the premiums well worth the piece of mind they provide.

There are a number of Personal Budget Templates on the ‘net which have income & expenses categorized. I found this helpful to capture more of my expenses, especially those annual ones, that I might forget about!

DAvid