Using Cash Value Insurance While Paying Off High Interest Debt

josh11Hey. Thanks for stopping by this post. I am starting this out odd because, well, I’m a bit tired.

The reason. This is the third time I am writing this post.

I started out trying to show how to use life insurance with debts, but it got way too complicated.

And every situation is so much different. But here is what I gleaned from this.

Also, understand that I am talking about high interest debt here, credit cards, etc. If you have low interest debt such as a home or a car, it needs to be treated completely different (you can watch my video here on how to pay off those debts).

Listen to this here…

The Monetary

First of all here is the monetary overview. Is it more efficient to pay off debt first, or put it into a life insurance policy first?

Monetarily, well, it depends (you may get sick of that response by the end of this post).

If you have a lump sum that you are going to put towards debt, then it will, in the majority of cases, make more sense to put it into a life insurance policy first. In this way, you are basically just exchanging high interest debt for future savings. So, it makes sense.

Now, the other side is just straight payments. Say you have 200 dollars extra a month, you could put it into a life insurance policy, or you could just put it into debt. Most likely, it will make sense to pay off the debt first. This is mostly because you are saving more money by paying off the higher interest debts than you will earn a policy.

I want to reiterate, this information is from a completely mathematical standpoint. There are many different factors I will get into that may affect any decision here.

And also, I just want to clear this up, we are available if you need a debt plan. We are here to help give you direction with your money, so feel free to call or email us if you want to see what is best for your current situation.

That being said, let’s look at the emotional side of all of this.

The Emotional

The first and very most important piece of all this is savings. No matter what, it is always best to be saving money, even while paying off debts.

And having an emergency savings plan is the single most important thing you can have. Save that first.

A life insurance policy does a really good job at joining these two pieces together. I’m not saying you have to use a life insurance policy, but it could be the best fit for this part of the plan.

The reason it fits well is because it is accessible and it has good growth in the long run. We can begin to plan for retirement and get in the habit of saving money. If an emergency comes up, we can access the money.

The point of this emotional discussion is; get used to saving money. If you have 200 dollars a month to put as extra payments towards debts, take 50 or 100 of that and start getting in the habit of saving money.

This is usually the key problem for most people in debt. They don’t know how to and they never get used to saving money. You need to get in the habit.

That’s about all I have at this point. The key to getting out of debt is developing a strong plan and following through with it. I can’t say one this is better than the other because every situation is so different. Do something, that’s the best way to start.

Life Insurance Boise

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Josh

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