I need to cut costs deperately in our budget and right now I'm considering redoing our whole variable life insurance policy and go back to a simple term policy. It would save us around $100 a month making this switch. I'm also trying to sell our extra vehicle but it doesn't look promising. I want to pay off $4000 worth of credit card debt within the next year and we will have our van paid off in December also. My husband's job stability is not looking so hot and I took a $2 pay cut in my new job when I got laid off in December. We have 4 kids so I know we need life insurance but I'm at a loss as to what to do. Also I want ot have my husband start putting money into his 401K but right now he won't because he doesn't think we can afford it. HELP

Whole life insurance is very expensive. We got rid of my whole policy. My DH and I have term life insurance for 20 or 30 years. The thought being when the life insurance term is up then the kiddos will be grown and out of college. Plus we should have some money away in 401ks and the such. Think about how much money the kids would need if you or your DH or both would die (What a horrible thought). I hope that you have a will ... you do not want the state deciding who watches over your children. Also, the older you get the more expensive more life insurance will be. So really look at what you need.

The whole 401k thing is based upon compounding interest.... so the longer the money is in the more it will make. Also, if your husband's business has a match then you are throwing out money. The 401k money is taken out pre-tax so it will lower your taxable income.

HTH

YES - get rid of your whole life policies. Dh and I did this recently as well. If you need to, cash out what you have in there as well. You could use that to pre-pay your term life for a year and get it even cheaper. If I remember right...we got 450K on me for like less than $300/year!!!

If it makes a difference, Dave Ramsey recommends term life over whole.

Let me know if you have any questions!!

I am going to be the odd one on this. If you get rid of your whole life policies, you are going to lose all you have put into it. With a term policy, you will have higher coverage for a time period at a lower cost, but when the time is up you are going to be older and paying a lot more to continue your insurance. But if you can't afford it and it is going to hurt you to continue the policies, you have to do what you have to do.

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The mighty oak started out as a nut that held its ground.

Get rid of the whole life. LIfe insurance is just basically to cover you for now- by the time you hit retirement, you should have more then enough saved back for funeral expenses, etc.

Since your husband job isn't looking the greatest, what I would do is cut every possible penny that you can from your budget. If you don't have a cash savings, definitely get that going FIRST. Cash is king. WHen you cancel your whole life policy, you will get the cash value back (check statements to see what it says for cash value). Save up to a thousand for an emergency fund then start working on the debt. Once the debt is paid off, then start stashing money into the 401K.

Yes it seems like backwards advice but it works.

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Devin