Would You Cut Up Your Credit Cards?

So I’m very fortunate in that I’m about to pay off all of my credit card debt. This will leave me with student loans and a mortgage (possibly a car payment in the future but that’s another post).

There are a lot of frugalistas who shout cut up your credit cards, but it’s a debate here. Many who advise cutting up credit cards say it’s so you don’t go into debt again. There’s a part of me that believes that if you are capable of going into debt again, you will find a way. I don’t think having a credit card will make the difference, it just makes it more convenient.

I do like credit cards for the fact that it puts a barrier between my bank accountant and most of my bills. For example, I do automatic bill pay but only from my online banking system, I don’t give anyone access to my bank account. I would rather leave my ATM/Debit card at home and only carry cash and an emergency credit card.

I don’t think I’m going to cut them up, only because of the sick and twisted sense of security they give me. Until we have a large emergency fund set up, if something happens and the furnace breaks, I would rather resort to a credit card than borrow against my house.

I will be canceling all cards that charge me a yearly fee and I will carry cash and one emergency credit card. It’s going to be weird. I’m going to have to get a new wallet because the years of using credit cards has stretched mine out. And that’s really sad to say. So tell me, would you cut up your credit cards?

LIFE INSURANCE FOR ALL? MOST DEFINITELY!

This week at a networking event, we had a bit of a discussion about life insurance and I was surprised that many people don’t think it’s a need. However, more people seemed surprised by the fact that I’ve had life insurance since I was 18 years old. And chances are, if I had a child, I’d have a life insurance policy on them the second they were born. Seems crazy, but I have good reason.

One week after I turned 18, my father passed away from lung cancer. We were lucky that he had a life insurance policy of $250,000, but the truth is, he should have carried more. My mother is disabled and was dependent on his income for survival. It also took her two years to get out of bed after we lost him. Currently, I have a life insurance policy of $250,000, but I may increase this in coming years.

I don’t just carry life insurance for income replacement as, to some extent, I could manage my expenses pretty well. I carry it for the same reason I would have life insurance on a child. I would be broken if something happened to my potential child and I do not know how long it would take me to recover. I need to plan for the replacement of my income as much as anything else.

Is it expensive? Many people are covered by work, but unlike Daisy at Add Vodka whose work covers 3 times her annual salary, my work only covers $15,000. If cost is a factor, it’s important to remember that term life insurance is not as expensive as people think. My last life insurance quote was less than $15/month.

The sooner you get life insurance, the lower your premium is. Also, if you get started earlier, the chances are that you will continue to receive reduced premiums, and you may not have to get physical exams at more advanced age.

What if you don’t have family? I have to admit I was surprised when someone brought up that they don’t have life insurance because they don’t have a family, or family that they have is better off than they are. I didn’t have a good answer at the time, outside of, “Isn’t there someone you want to leave something to?” (Apparently, I’m not too quick in the moment.)

But let’s suppose you meet the love of your life at 50 and decide to get hitched. It’s far easier to transfer the name of a beneficiary when you’re older, than it is to get a new life insurance policy. In the meantime, you can make the beneficiary of your life insurance anyone, including your favorite charity or religious organization. You may decide not to get life insurance now, and it is almost never too late.

Please remember that insurance is a stop gap against what you cannot foresee. After I had life insurance and health insurance I worried less about what could potentially happen, the personal and financial unknown boogeyman that I could not foresee but felt was lurking. For $15/month, that’s priceless.