Let’s say you buy a life insurance policy that has kicked in immediately or after a waiting period, and you meet your unfortunate demise a day, month, or several years later. Will your beneficiaries receive the entire amount? Broadly speaking, yes.
So, how long do you have to have life insurance before it pays out? If you have, say, a 25-year term life policy, then your loved ones are usually covered for 25 years. If you have an active permanent life policy, the entire death benefit is generally in place during your lifetime.
There’s a significant cost difference between term life and permanent life insurance, though. Stay tuned.
Life Insurance Basics
Life insurance is meant to protect a spouse or partner, children, or other family members upon your death. It is intended to replace your income and avoid a large financial loss while paying the costs of a funeral or a memorial service.
When it comes to life insurance plans, there are two main types: term life and permanent life. Both kinds of insurance are sold by the majority of life insurance companies.
No matter which type you have, when you die, your beneficiaries or the executor of your estate will need to file a claim with the insurance company in order to receive the death benefit. The payout may come in one lump sum or in another form, depending on the insurance company.
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How Does Term Life Work?
Term life insurance is often viewed as more cut and dried than permanent life insurance. Policy owners make regular monthly payments during the term. The insurance company pays a death benefit — or the amount of the coverage — if the policy owner dies during the term.
Term life insurance covers a set period, such as 20 or 30 years.
The coverage can range from $25,000 to several million dollars, depending on the insurer and your financial needs and plans. If the insured dies after the time period chosen, the insurance company will not provide the payout.
The intent of term life insurance is to ensure that your financial responsibilities are taken care of in case of an illness or tragedy. A policy can support the financial needs of children, help a stay-at-home parent find their footing, or cover a mortgage, credit card bills, or other outstanding debt.
Parents may decide to buy term life insurance while their children are younger and before they go to college or establish careers. Some people might also choose term life insurance because it typically costs less than permanent life insurance. Others may opt for term life because they believe they’ll be self-insured when the term ends or because they want to protect certain assets, such as paying off a mortgage.
What Is Permanent Life Insurance?
Unlike term life, permanent life insurance provides coverage for a lifetime. For example, when you purchase whole life insurance, a common kind of permanent life, the policy remains in effect for the rest of your life unless you cancel it or miss payments. Beneficiaries receive the death benefit after the insured passes away.
Permanent life insurance can be more complicated because there is a “cash value” included in the policy. These financial products are seen as a combination of insurance and savings.
One of the main differences between term life and permanent life insurance is the amount of the premium, or the money that you pay each month to maintain the policy. Permanent life insurance is usually more expensive than term life insurance because it provides longer coverage.
Recommended: 8 Popular Types of Life Insurance for Any Age
What to Consider When Choosing a Policy
There are several things to evaluate before you purchase either term or permanent life insurance. Examining the options will help you decide which type of insurance will meet your financial needs the best.
Waiting Periods
A waiting period is the length of time the insured person must wait before some or all of their coverage kicks in. Some life insurance companies will make policies effective immediately or as soon as the first payment is made.
Waiting periods were created to avoid fraud and are one way that insurance companies protect themselves. If the insurance company does not have a waiting period, the policy is likely to be more expensive than one that requires someone to wait.
When applying for any life insurance policy, it’s best to ask if there is a waiting period and whether any exceptions exist. Then, once a policy is issued, it’s smart to confirm the details.
Cost of Premiums
One major factor in weighing term life and permanent life insurance policies is the monthly premiums. Typically, term life insurance costs less — often much less — than permanent life insurance, even though the coverage amount is the same.
The difference is that permanent life insurance has a cash value component. If you need to take out a loan, you can use that money as collateral based on the interest rate given in a policy. The cash value part of a permanent life insurance policy generally grows tax-free, though in some cases withdrawals, loans, and surrenders may be taxed.
Permanent life insurance has a cash value component and costs more than term life.
One main difference between term life and permanent life is that if you live beyond the term that you chose, no money is paid out. Term life insurance policies have no cash value.
Recommended: How to Buy Life Insurance in 9 Steps
Making the Right Choice
Choosing between term life and permanent life insurance policies can be difficult. While permanent life insurance policies have a savings portion, the “cash value” is invested by the insurance companies and they choose what assets they want to invest in.
Other criteria that may help you make a decision are whether you are married or not, if you have children and how old they are, if you think your salary will increase over time, and how much debt you have, such as your mortgage, other loans, and credit card bills that would need to be paid off if you died.
Changing a Current Policy
You may already have a life insurance policy, but life circumstances can change rapidly. Some life insurance companies might allow you to either increase or decrease the amount of coverage.
Permanent life insurance policies tend to be more complicated, and changes may mean that you will have to pay administrative fees.
Most permanent life policies have a surrender charge, which is subtracted from the top of your cash value if you end, or surrender, the policy. Surrendering a policy means giving it up. You’ll receive the cash value, minus any fees. By canceling the life insurance policy, your heirs will receive nothing from it when you die.
The Takeaway
Life insurance can help protect your family from the financial impact of your death. Term life insurance provides coverage for a set amount of time. If the insured person dies during that time, their beneficiaries receive the entire payout. Permanent life, on the other hand, provides lifelong coverage and comes with a cash value. Beneficiaries receive the payout after the insured dies. As you consider policies, be sure to note the costs involved.
If you’re shopping for life insurance, SoFi has partnered with Ladder to offer competitive life insurance policies that are quick to set up and easy to understand. You can apply in just minutes and get an instant decision. As your circumstances change, you can easily change or cancel your policy with no fees and no hassles.
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Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, Social Finance. Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under Ladder Life™ policies. SoFi is compensated by Ladder for each issued term life policy.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. SOPT0523005
In my last article at Get Rich Slowly, I gave the background on my income and expenses. My husband’s income and expenses are a little more difficult to compile. For one, Jake left the life of a steady paycheck about a year ago in order to start his own business. This means that his income fluctuates, which of course we knew going in. It also means that the first few years he’s going to make much less than we hope he will eventually. We also knew that going in.
However, another major factor is that Jake’s idea of household budgeting is “make so much money it doesn’t matter what you spend because you can afford it all.” When he started working at The Big Firm right out of law school and was making $90,000 a year, this was something that was more or less possible, especially since he was working 80+ hours a week and didn’t accumulate vacation or sick time. He didn’t have time for anything really spend-y. However, even though he’s now living the entrepreneur’s life, he’s resistant to budgeting. Earlier this week I sent him J.D.’s article about how to budget for an irregular income, and his response was:
This assumes that I actually have a budget…which I do not. I just make however much money I happen to make and pay whatever bills happen to fall due. Perhaps it’s not the best system, but it’s worked well so far.
Related >> How to Budget for an Irregular Income
I suspect that it’s going to take a major crisis or two of his own making before he comes to view things differently. One of the things I’ve learned over the last six years is that he almost never agrees with me the moment when I propose something; however, six months to a year later he’ll suggest it like it was his own idea. Go figure.
Since there’s nothing I can do at this point to convince him without violating the tenets of how to talk to your partner about money, I’m willing to wait. And to keep our finances separate, at a minimum, until we’ve reached a point where we are more in sync.
Related >> How to Talk to Your Partner About Money
Even then, we may opt to continue to keep our finances separate. Interestingly, Jake grew up in a household where access to money was used as a weapon, and Jake is also the spender in our relationship. On the other hand, I don’t recall my parents ever having a single argument about money, and Jake referred to me yesterday as “the most frugal girl he’s ever dated.” In the meantime, though, since his situation does affect me and I have access to his Mint account, I have started compiling his data so it’s ready for him to work with when he comes on board.
Jake’s Irregular Expenses
Unless otherwise noted, the amount listed reflects just his share, even for things like auto insurance that will be joint going forward, since we haven’t combined finances yet. For some categories — like auto expenses, gifts, and healthcare — I’m assuming his costs are about the same as mine until I have data suggesting otherwise. These are annual numbers.
Auto insurance: $840. This is the annual total; he pays $420 every six months in January and July. Similarly, in my recent post when I said my auto insurance was $500, that was also the annual total. I pay about $250 every six months.
Auto expenses (repair/maintenance): $250
Auto registration: $250. Quite a bit more than mine, since his car is 8 years newer (and also much nicer)
Gifts: $1000
Health care (copays, etc): $500. Numerous people said my $1000/year estimate was high, and when I double-checked, I realized that I’d double-counted my massage costs in both the irregular expenses category and the recurring monthly category. This means my actual irregular medical expenses last year were closer to $230. However, I think it’s best to estimate high in this category, and I know Jake has more prescriptions than I do.
Vet expenses (pets): $2300. As noted in my previous breakdown, he would have paid half of this. All three of our pets had dentals last year, and one of the cats had an extraction while the other had some medical issues that had to be resolved before she could go under anesthesia. This category also includes grooming for the dog (a poodle), which runs about $50 per grooming.
Mensa annual dues: $60
Total: $4050
I am sure there are expenses I am missing, and will be filling in this category over time. For example, he recently spent $437.36 on his 30,000 mile check-up, so he’s over my initial estimate. However, not only should he not spend any more this year (knock on wood), I believe that’s the first major repair/maintenance since he bought the car in 2008. And, since he is only driving an average of 7,500 miles/year (and that average should be dropping even more now that he works from home), we fall into the category of “gentle drivers” and these costs should stay relatively low.
Jake’s Regular Expenses
Like the irregular expenses, the amounts listed below reflect only his share for things, even if they are a joint expense. Accordingly, the pet, grocery, Netflix, internet, rent, satellite cable, renters’ insurance, and electricity categories should be doubled if you want to get an idea of our joint/mutual costs. Please also note I solicited more information about his credit cards and have updated the information that originally appeared here. For his payments, however, I am going by what he has paid historically, not what the minimum payment actually is. These are monthly numbers.
Gas, auto: $55
Pet expenses: $50
Grocery/household: $300
Cell phone: $135 (Note: Jake uses his cell phone for the business, too, though I’m not sure if or how he separates it from his personal use.)
Drycleaner: $40
Netflix: $8
Internet: $32.50
Satellite cable: $37
Renters’ insurance: $9
Electricity: fluctuates throughout the year, in summer $100
Withdrawal/cash: unknown, I suspect it varies widely
Charity: $10 (Humane Society)
Haircuts: $18
Rent: $488
Student loan 1: $180
Student loan 2: $70
Student loan 3: $176
Student loan 4: $112
Auto loan: $300
Credit Card 1 ($12,697.64 @ 4.99% for life): $400
Credit Card 2 ($2,202.87 @ 7.5% variable): $200. This is the one in my name.
Credit Card 3 ($2,648.33 @ 3.99% for life): $200
Credit Card 4 ($1,875 @ 0% until 3/6/13): $175. His share of the wedding expenses not covered in advance.
Credit Card 5 ($8,175.51 @ 0% until 9/1/12): $125. A loan to the business to sign up for a year’s subscription to a client-referral service.
Credit Card 6 ($1,350 @ 9.99%): $150. A loan to the business to cover his partner’s expenses when he was short.
Total: $3,370.50
Jake’s Income
Here’s where it gets tricky. Since January he’s paid himself twice per month in amounts varying from $400 to $5,963.98. Based on his disbursements year-to-date, he can expect his gross salary for the year to be $47,577.42. On average, he’s grossing $3,659.80 per month.
On the surface, then, he’s making enough to pay his bills plus a little extra. However, I’m sure he’s spending it all (that is, I expect that eating out and miscellaneous purchases would take us to the limit of his gross salary). I guess this is what he means when he says “it’s worked well so far.” However, he hasn’t been paying quarterly estimated taxes. There are some structural changes to the business that took effect August 1st, and he’s been waiting for that to start his quarterly payments.
Based on my calculations (which I will freely admit are pure guesstimates based more or less on my own withholdings), he can expect to owe approximately $8,840 by the end of the year. This amount should include federal and state income tax, social security, and medicare. Based on his earnings to date, he should have $4,760 set aside for taxes as of this moment. Guess how much is in his savings account right now? $4,194.99. So he’s short of where he should be and since he had been thinking of that as his emergency fund, not his tax fund…well. You see the dilemma.
Where to Go From Here?
Regarding budgeting, my plan is to continue to suggest it and wait for him to catch on before deciding whether to combine finances. He’s never even calculated any of this himself, though I did share the projected tax information with him, which he appreciated. While he freely admits he has no idea when any specific bill is due and is always surprised when they arrive, he also doesn’t see any need to change the system when he’s never been late paying any bill and pays more than the minimum on all his credit cards.
On the positive side, his average disbursement to himself has doubled from about $1,000 to about $2,000, so his business is growing.
What would you do in my situation? As I mentioned in the comments of my previous post, I refuse to become The Girl Who Only Says No or The Girl Who Only Talks About Money, because that will only poison the well for every aspect of our relationship, not just our finances.
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The Christmas season is here and you want fun ideas to do!
To help make your life easier this year, I created a bucket list full of over 100 activities. You can use it as an actual bucket list or just enjoy scrolling through some fun things to do with friends and family before December 25th.
You will find everything from decorating ideas for your home (from simple snowflakes that are easy enough for kids to make) all the way to DIY recipes for Christmas treats.
Who doesn’t love a good list?
This Christmas bucket list is things you can do with your family around the Christmas season to make it more lively and enjoyable.
I made this list for my own kids, but I thought I would share it with you to use it too!
How can you make your Christmas bucket list more fun?
There are many different ways to make your Christmas bucket list more fun.
One way is to focus on new activities that you haven’t done before. Another way is to add food-related activities, which always make Christmas special.
You can also try incorporating some outdoor activities, even if it’s just for a (snowy) day.
And don’t forget about family traditions! They’re a big part of the holidays and can really enhance the experience.
No matter what you do, make sure you enjoy yourself (and not stress yourself out)! The holidays are a time for celebration and should be spent with loved ones. Merry Christmas!
Memorable Christmas Bucket List
While we love the classic Christmas bucket lists, we also are always looking for unique ideas to add to your holiday bucket list.
Some of these out-of-the-box ideas are pretty sweet and you may want to do them year and year again.
You can find everything from baking cookies to attending a German market to spending Christmas at a lodge. No matter what you choose, make sure you keep in touch with your family and friends during the holidays.
1. Go to Mexico. This is one of our Christmas traditions! There is something relaxing about enjoying the beach while Felix Navidad is playing in the background. (Gift hint… all of the beach gifts can be given to be used on the trip.)
2. Book a Wintery Mountain Stay. On the flip side, there is something magical about sipping hot cocoa while by the fireplace when giant snowflakes are falling outside.
3. Participate in a Neighborhood Luminaires Night. Organize one night for all of your neighbors to put luminaries outlining their driveways. It is a symbolic event with neighbors coming together in peace.
4. Roast Chestnuts. Just like in the famous song by Nat King Cole, it is your turn to roast chestnuts on an open fire.
5. Wrap Presents with Friends. For some wrapping presents is fun, for others it is a task. But everything is always sweeter to do with friends, so plan a time to wrap presents with friends. Appetizers and drinks are optional.
6. Order Matching Christmas Pajamas. This is a popular Christmas tradition for most families. Make sure you order your matching Christmas Pajamas in time. Some of my favorite places to find them are Kohl’s, Macy’s, and Amazon.
7.Wear Matching Christmas Pajamas. Depending on the age of your kids and spouse will depend on how well the matching outfits go over. Make sure to snap pictures!!
8.Kiss Under the Mistletoe. This is a fun Christmas tradition for kids and adults. Kids love this because it’s not just kissing their parents on the cheek, but they get to kiss everyone in the room! Adults love this too because it’s a great opportunity to get some alone time with your significant other.
9. Host a Progressive Dinner. This is a great idea to host a fun holiday party. For each course of a meal, you move houses.
For example, you start at house A for appetizers.
Then, move to House B for dinner.
Finally, wrap up at House C for dessert.
If you have more houses participating, then you can easily stretch to a 7-course meal.
10. Buy Ugly Christmas sweaters. This is a love-hate for many people. Are you totally into buying Christmas sweaters or do you want to shy away? Either way, it is always helpful to have at least one ugly Christmas sweater in your closet.
11. And then host an Ugly Sweater Christmas Party. Time to invite all of your introvert friends for an epic ugly sweater party. The winner walks away with a prize!
12. Go to a Christmas Eve Service. If you’re feeling a little more spiritual, there are many churches that offer Christmas Eve services. If it’s your first time going to one, consider this a good opportunity to introduce the whole family and get them interested in going.
13. Classic Christmas Movie Marathon. This is always a popular idea! Especially one that is next to free to do! Pull up the classic movies and enjoy!
14. Read Christmas Books. This is another one that is uber-popular in our house! We try to stick with Christmas-only books in the month of December. One of our favorites is JK Rowling’s latest book!
15. Go on River Cruises. The river is a great place to find some peace and quiet. You can go during the day or at night.
16. Stay Downtown. Whether you are looking in another state or in your own city, you’ll find a new adventure.
17. Snowman Building Competition. Set up a snowman building competition in your neighborhood and let the winners decide what charity to donate the money raised! Bragging rites until the next competition is held.
18. Shake a Snowglobe. Maybe even add to your snowglobe collection. There is a great children’s book called Snow Globe Family. That is a super fun read.
Classic Christmas Bucket List Ideas
This is the list you think of when it comes to Christmas things to do!
Whatever you decide to do this holiday season, make sure it’s something that will create memories that will last a lifetime.
19. Bake Christmas Cookies. This is the classic holiday bucket list idea. Here are some of our favorite Christmas cookie recipes.
20. Watch Christmas Hallmark Movies. Did you know there is a countdown to when the Hallmark Channel releases their Christmas movies?!?! Yes, this is a must-do for many people. In fact, you may want to buy them the same Hallmark socks we gave our moms.
21. Host a Christmas cookie exchange. Yes, please! Cookie exchanges are the best. In fact, it is one of the most popular Christmas challenges.
22. Go Christmas Caroling. Is it a tradition? Or is it just something that you love to do with your friends and family? Bring joy to your neighborhood or nursing home by singing traditional Christmas carols.
23. Volunteer. This could be serving at a soup kitchen, organizing an event for people who can’t afford gifts to “shop,” or lending a hand to a neighbor in need. There are many organizations looking for help.
24. Build a Snowman. Yes, this is the ultimate idea for families. Make sure you have the snowman supplies to dress up your Frosty the Snowman properly. Don’t forget the carrot nose!
25. Build a Gingerbread House. This is a classic activity for many kids and you can easily pick up a gingerbread house kit for under $10. However, it is not just for kids. Check out this family’s gingerbread house display!
26. Christmas Portrait Time. Thankfully, this time of year you can find plenty of Pinterest-perfect backdrops to take portraits at. You can take family photos or one of each person in your house. This accessory helps your amateur photos look professional!
27. Mail Christmas Cards. This may have been a long-standing tradition for many years and slowly making a comeback. You can take Christmas photos just for the occasion or a collage of photos. Order your Christmas cards here.
28. Read Twas the Night Before Christmas. This Christmas classic must be read at least once on Christmas Eve. Grab your copy of the classic book.
29. Find Creative Ideas for Elf of the Shelf. Let’s face it. You jumped on this tradition … hook.line.and.sinker. Now, you must keep up with all of the Pinterest perfect ideas.
Christmas Outdoor Bucket List
Time to get outside and explore. Fresh air is always helpful!
30. Go Sledding. This is a classic bucket list item. Check out a new sledding hill in your neighborhood.
31. Build a Snow Fort. This is personally one of my favorite activities, but Mother Nature must cooperate with tons of snow! Grab some shovels and start building a fort!
32. Snowball Fight Time. Who doesn’t love a good snowball fight?!?! Grab some friends and head out for an epic snowball fight. Even better if you built the snow fort prior to game time!
33. Go Ice Skating. This is a classic especially if you live in the upper midwest. There are plenty of recreation centers that make ice skating a reasonable cost activity.
34. Skiing. Fresh powder sounds like the perfect Christmas tradition. Just make sure to book your ticket early.
35. Plan a Wintery Picnic. Grab a blanket, lunch, some hot cocoa, and your Christmas Pajamas for an outdoor picnic this winter! Make this time special with a special picnic basket to use.
36. Go Snowboarding. Time to shred the slopes. Check out the latest snowboarding gear.
37. Time to Go Tobogganing. What is tobogganing exactly? Much like sledding except you hit the snow-covered slopes and artificial-ice-covered chutes with a toboggan.
38. Give the Gift of Nature. Take your family on an outing to see some beautiful nature! Get out in the fresh air and enjoy the beauty of nature.
39. Make a Snow Angel. This is the perfect activity for kids to do. Yet, very calming and peaceful if you decide to get down in the snow and create snow angels.
40. Hunt for the Perfect Live Tree. Grab your permit and go on a hunt for the perfect Christmas tree. Make sure to bundle up and wear snow boots!
41. Catch Snowflakes on your Tongue. Regardless of your age, this childhood memory needs to be done yearly for your Christmas bucket list. Drop all of your worries off your shoulders as you catch a snowflake on your tongue.
42 Skate on Outdoor Ice Skating Rinks. Skip the indoor rinks and head outside to skate. Even more romantic if the snow is falling.
43. Create a Winter Wonderland. This one is a do-it-yourself project that doesn’t require any crafting skills.
44. Go for a Holiday Walk. Take some time out of the hustle and bustle by taking a walk outside.
45. Neighborhood Christmas Light Competition. Another great idea is to put your home in a Christmas lights competition! This can be really fun if you have friends and family who live close by. All you need is some creative decorations and an appetite for holiday cheer.
Name That Entertainment Holiday Bucket List
Time for friends, laughter, and fun!!
These are the social must-haves on your entertainment holiday bucket list!
46. Host Christmas Eve Dinner at your home. If you have room, open up your home to friends or family who might otherwise be alone for Christmas. Our Christmas Eve tradition is fondue!
47. Christmas Party Night. Invite your friends and family over for a Christmas party night! This is a fun way to get everyone together in one place, have some laughs, and enjoy each other’s company.
48. Wear Christmas Dress Attire. Everyone wants an excuse to dress up. So, make sure you have a special occasion to year your Christmas cocktail dresses.
49. Find Entertainment from the Seasonal Classics. This could be watching The Polar Express (it’s on Netflix now!), listening to holiday music, or reading a children’s Christmas book.
50. Host an Advent Calendar Party. It is so much fun to count down the days before Christmas! This works especially well in a classroom setting. Each day is a new activity to count down the days until Christmas.
51. A Christmas Story. Watch A Christmas Story and then read a few of the lines with your friends!
52. Home Acting. Put on your own production of your favorite movie or theater production!
53. Misfit Toys. Collect a variety of small, inexpensive toys and have your guests guess which toy belongs to each guest. To make it more fun, be sure to include some items that are broken or missing pieces!
54. Mistletoe Bingo. Get your guests in the Christmas spirit by setting up a bingo board with different categories for them to fill out!
55. Birthday Party for Jesus. ‘Tis the reason for the season – the birth of Jesus Christ. Plan a birthday party to celebrate everything Jesus gave to us.
56. Holiday Game Night. Christmas is a time for fun and games, so why not have a Christmas-themed game night? Some popular game ideas include playing charades, Pictionary, or Cranium. You could also try some new games that you haven’t played before – like Elf on the Shelf or Monopoly.
Holiday Season Bucket List Around Town
One of the best things about the holiday season is there are SO MANY activities to do with no money. You can find something to do each day for free.
The paid events are classics that create lifelong memories!
57. Book a Limo to Check out Christmas Lights. What better way to enjoy watching the Christmas lights and not having to drive? Personally, this works great when sharing the limo costs with friends!
58. Attend a Local Craft Fair. These craft fairs are becoming a hot place to find personalized gifts. Plus it is a great way to give back to local small businesses as well as the high school teams and clubs who organize the craft fairs.
59. Book Tickets to a Lightshow. This is a hot commodity so make sure to book your tickets early – like around Halloween. That way you will get the prime time you want to attend the light show. Also, many areas have more than one popular light show to see!
60. Attend a Ballet Performace. While the Nutcracker is a popular dance performance, there are plenty of other ballets at this time of year.
61. Watch The Nutcracker Live. I have danced in and seen the Nutcracker so many times that I have lost count. However, I love the production, the costumes, and the music! Make it more magical by taking a young girl who has never seen the Nutcracker before and watching the production through their star-struck eyes.
62. Visit Your Local Christmas Market. Every town has one. A local store stocked with all things Christmas! Maybe even see if your area has a German Christmas Market and check out the varying traditions.
63. Attend a Holiday Tree Lighting Event. Right after Thanksgiving, there are plenty of local tree lighting ceremonies. Check with your city for dates and times.
64. Attend a Holiday Festival. The holidays are the perfect time to attend a festival with family or friends. By attending, you can enjoy the activities and experience new things that may be on your list for next year!
64. Attend a Christmas Parade. Get out and see the Christmas spirit in all of your favorite holiday traditions. Most cities kick off the holidays with a parade.
Christmas Bucket List in the Kitchen (Recipes a Must!)
Around the holidays, the kitchen is the hub of the activity. More money is spent on food and drink in November and December. So, you must include a few of these Christmas activities on your list.
65. Decorate Sugar Cookies. This is a great project that tastes delicious. It’s also really easy and you’ll be surprised how much your decorating skills improve each year.
66. Make Hot Cider. Hot cider is a great drink to have this time of year. This Christmas treat can be made in the oven or on the stovetop, with just enough heat that it’s still perfect for kids and adults. Plus it makes your house smell naturally festive.
67. Enjoy Hot Chocolate with Marshmallows. This is a perfect wintertime drink. Surprise the family with cute Christmas mugs.
68. Drink Egg Nog. This is a classic must-have during the holidays. There is something that warms your belly with the creaminess of egg nog. Make sure to buy your Egg Nog early as many stores ran out at Christmas time. Which eggnog flavor is your favorite?
69. Gourmet Hot Chocolate Bar. Set up a hot chocolate bar with all of your favorite toppings, like cinnamon, heavy cream, and gourmet chocolates. This will make the holidays even more special!
70. Snowy Ice Cream Treats! Make some delicious homemade ice cream and put it in bowls or cups and hand them out to your loved ones.
71. Visit a Bakery. These places are filled with great ideas! If you don’t have time, pick up one of their creations. Or try to make your own at home.
72. Make Your Own Gingerbread House Kit. This gingerbread house kit contains everything you need to make a gingerbread house this season.
73. Make Homemade Marshmallows. These are so simple to make and perfect for hot chocolate or in a sugar cookie recipe!
74. Make a Birthday Cake for Jesus. There is a huge reason to celebrate! So, let’s bake a cake and celebrate!
Crafty Christmas Bucket List
You don’t have to be super crafty for any of these projects. Simple ways to make decorations!
For many people, making their own gifts is a great way to give awesome Christmas gifts when you are broke.
75. Get crafty! There are thousands of Christmas crafts you can do during this season! Some ideas include making ornaments or wreaths, cutting out snowflakes, decorating a gingerbread house, or making your own Christmas cards.
76. Make DIY Christmas Tree Ornaments. Okay, I will be honest … there are so many great ideas for DIY Christmas Tree ornaments that I freeze on which project to actually complete. So, pick 1 or 2 that you know are within your crafty skills and get started!
77. Make Paper Snowflakes. This is a classic Christmas activity to do.
78. Make a Christmas Wreath and Decorations with your kids or family members. This is great for the whole family to do together, as it helps create memories that are sure to last a lifetime.
79. Wonder the Craft Stores. With no agenda and plenty of time! Let your mind wander and fill with amazing Christmas crafts you could make.
80. Make Salt Dough Ornaments. This is the simplest Christmas craft for the non-crafty person! Learn how to make salt dough from Katie.
81. Create Candy Care Garlands. The options are endless on this one! You can use big candy canes or mini candy canes to make your garlands.
82. Decorate a Christmas Photo Frame. This is a fun project that can be completed in just minutes! Take any old frame and spray paint it white. Then, add Christmas decorations around it or use spray painted puzzle pieces.
83. Knit Christmas Mittens. This is a quick and easy project to knit up for the holidays!
84. Make Your Own Snowmen. Make your own snowman out of rice or beans, it’s fun and easy.
85. Put Snowflakes on the Windows. This is a fun and easy way to decorate for the holidays.
86. Make Your Own Poinsettia Wreath. These wreaths can be made in no time at all!
87. Find Creative Ideas for Elf of the Shelf. Let’s decorate the elf and make its day bright!
88. Make Wreath Cards from Last year’s Christmas Cards. This is a great way to upcycle and make unique Christmas ideas. Watch this YouTube video to learn how.
89. Decorate Staircases with Ribbons. This is a simple trick to make your house look more festive!
90. Make Orange Peel Poppuri. This is a simple and quick recipe that will make your house smell fragrant.
91. Make Christmas Cards. This is the perfect time to make your own Christmas card with all of your family members, friends, and even pets! There are so many fun ways to customize these cards. You can be crafty with paper supplies or use a digital template.
Decoration Christmas Bucket List
The decor is the major component of the holidays! Make sure you are ready to get decorating!
92. Decorate the Christmas Tree. This “to-do” should be treated with a little more emphasis. Plan an event around decorating the tree and sharing memories while hanging ornaments.
93. Create a Themed Christmas Tree. Star Wars fan? Barbie lover? Marvel fan? Sports diehard? Time to unleash all of your passion and decorate a themed Christmas tree in honor of your fervor. Find some ideas to jumpstart your creativity.
94. Hang Chrismas lights. Even better make your house look better than the National Lampoon’s Christmas Vacation. Order your lights here.
95. Upgrade Your Christmas House Lights to a Christmas Light Show. Thankfully, technology has greatly approved and you do not need to be an engineer to figure it out. You can pick up this up and quickly set your lights to music.
96. Pick a New Scent for the Holidays. Personally, I like peppermint.
97. Buy Cute Christmas Dish Towels. This is a simple decoration tip from the pros. With this simple purchase, it looks like your house has been staged for the Pinterest perfect Christmas dinner.
Shopping Place for Holiday Activity
Every bucket list has gifts on it, so time to get your shopping done!
98. Create your Christmas Budget List. While this may not be on the top of your list, this is a very important money management tip to master. Learn how to make a Christmas budget that works for you.
99. Shop for Christmas Gifts. This is a great time to find gifts for your friends and family. No need to rush, but shop early if possible! Amazon has a ton of gift ideas that are easy on the wallet too! Find a list of the best Christmas gifts under $10 for kids.
100. Purchase Christmas Flowers just for You! Buy some fresh flowers from your local flower shop and enjoy them for the holidays!
101. Wear Christmas socks. Hello, we all love cool socks! Make sure you pick up some new Christmas socks for your holiday collection.
102. Start A Collection. If you are looking for some easy gifts, start a collection that can be added year after year! A few examples include Christmas ornaments, books about Christmas traditions from around the world, and ornaments made out of candy canes.
103. Shop A Christmas Store. Find a Christmas Store; they are worth a visit if you want to get into the holiday spirit! They have everything from traditional nutcrackers to more unique items like Santa toilet paper holders. No matter what your interests are, these specialty stores have something for everyone.
104. Give Money Creatively. Did you know you could give money besides just writing a check? There are over 45 different money gift ideas for you.
Christmas Bucket List for Family Activities
Entertaining the kids is a must! Thankfully there are so many things to do.
Plus you can see the magic of the season through their eyes!
105. Write a Letter to Santa. This needs to be done in the first part of December in time to reach the North Pole.
106. Make Reindeer Food. Fruit and vegetables make a great snack for the reindeer, so it’s easy to do this activity with your kids. You can also experiment with adding different spices into the mix such as cinnamon or nutmeg.
107. Watch the Holiday Funny Movie Marathon. This is a fun way to spend a cold or hot day. Pick out some of your favorite hilarious movies and get cozy in front of the TV! Laugh til you drop!
108. Make Winter Slime. Yes, every kids LOVES slime and what is better than just slime… WINTER SLIME! Pick up Iceberg Frozen Winter Slime for your kid’s Christmas Party.
109. Host a Kid’s Christmas Party. This is something we have done every year is to host a kid’s Christmas party. It is a simple and festive way to share in the Christmas season. Provide some simple Christmas crafts, hot chocolate (with marshmallows of course), and easy snacks.
110. Sing Christmas Carols. This is a fun family activity that will make you feel festive!
111. Visit Santa. This is an old-fashioned tradition that never gets old. Visit Santa and find out if you have been naughty or nice!
112. Make Paper Snowflakes. This activity is a must for kids. Simple and easy to make. Plus they will get lost in the activity for hours! Find paper snowflake ideas.
113. Make Rudolph Pancakes. One easy way to make your Christmas bucket list more fun is by adding some creative and festive tasks to ordinary things like making pancakes.
114. Talk to Santa Claus. It’s hard to believe, but there are actually people who talk to Santa every year and make sure he has everything he needs for Christmas Eve. You can talk to him on the phone or online, and it’s a great way for your kids to get in touch with their inner child.
115. Go for a Christmas Scavenger Hunt. This is a great family activity that will have your kids having fun and learning at the same time. You can make it as easy or as hard for them to complete, depending on their age.
116. Make a Christmas wish list and check it twice. Have the kids pick out gifts they would like for themselves as well as give to others.
117. Have a Holiday Movie Night with your Friends and Family. Make some popcorn, grab your favorite movie, and cuddle up on the couch for an evening of laughter!
Holiday Bucket List to Help Others
You don’t have to be a millionaire philanthropist to help others in your community. You can make a difference by doing small things that will go unnoticed, but still, provide assistance for those who need it.
118. Participate in Random Acts of Kindness. This is a fun way to do something nice for someone else this Christmas. It’s also a great opportunity to practice your own “random acts of kindness” you want to give back in the new year.
119. Polar Plunge: A Fun and Festive Way to Help Others. Create a team of people who will pledge money for every degree the temperature drops below freezing! Make sure to follow through and take the polar plunge!
120. Donate to a Food Bank. Make a donation to your local food bank or homeless shelter in order to help those who are less fortunate during this time of year. This is a perfect way to help those in need in the wintertime and continue the tradition year round!
121. Be Someone’s Secret Santa. This is a fun and heartwarming tradition that works well for your whole family. It’s simple, too: just give out the names of people you would like to be Santa Claus for in December and tell them not to let the person know who you are.
122. Donate Toys. There are a ton of organizations that accept donations of toys or other items. Find the best charities to donate your old toys and help those in need this holiday season!
123. Make a Financial Contribution to a Nonprofit. Most nonprofits receive the majority of their financial donations in the last months of the year. Maybe see if you could make it a part of your biweekly budget and give more often.
124. Visit the Animal Shelter for a pet adoption event. It’s not just cats and dogs that need homes on Christmas Eve! Many of our furry friends are forgotten about this time of year. Stop by a local animal shelter.
125. Adopt a Family for Christmas. If you’re not into the whole Santa Claus thing, why not take it upon yourself to give back to the community? Adopt a family for Christmas by purchasing gifts, food, and necessities that they might not otherwise have. There are many families in need this time of year and it’s truly an act of love and kindness to give back in this way.
126. Give the gift of music. If you’re a musician or know someone who is, offer to play at a nursing home or assisted living facility on Christmas Eve. If you’re not a musician, sponsor the music of a local choir or orchestra.
127. Give the Gift of a Smile. Visit an elderly neighbor and say hi. Smile to the person behind you in line. It takes more muscles to frown than smile.
128. Pick a Tag from a Giving Tree. Many companies set up a tree with tags of people who are in need. Then, their employees can pick a tag and purchase the selected item.
129. Baking for Others: A Fun Way to Help Others. Bake for someone in your neighborhood and donate the ingredients to an organization that feeds people in need!
130. Pray for Peace and Happiness. Don’t stop praying during these hard times. Pray for peace, happiness and prosperity around the world.
Something Else for Holiday Bucket List Items
These are the ones that are still awesome ideas but don’t fit in the above categories!
131. Empty your Christmas Schedule. This is a great way to destress, especially if you have been stressing about your holiday season.
132. Start Dreaming About Your New Year’s Resolutions. This one is my favorite! I love rolling over to a new year with fresh dreams.
133. Grab your Yearly Planner before January 1st. Yes! Especially with supply chain issues, I recommend getting your yearly planner in advance. Here is the current yearly planner I use.
134. Create Your Own Advent Calendar. It’s easy to create your own advent calendar. Use a simple white board and some markers to create your own countdown to Christmas.
Christmas Bucket List for Couples
These are the top 10 ideas from above just for couples!
Ice Skating at Night
Kiss Under the Mistletoe
Go on a Sleigh Ride
Romantic Movie Night
Catch a Snowflake on Your Tongue
Enjoy A Fireside Cuddle
Leisurely Stroll on a Snowy Mountain Area
Escape for a Night Away
Volunteer Together
Dream About Your Future
Christmas Bucket List Template
Okay, we gave you TONS OF IDEAS!
There is absolutely no way you can accomplish them all in one Christmas season.
So, here is a template to use to pick your top 25 activities to complete.
If you’re like us then setting up the tree is something that you always look forward to. From decorating the tree, baking cookies, and watching movies under it with your family this Christmas is sure to be a magical time for all of us!
What are some tips for creating an ultimate Christmas bucket list?
There are a few things to keep in mind when creating your ultimate Christmas bucket list.
First, make sure that it includes experiences that you will really enjoy. This is not the time for obligation or duty–the list should be filled with activities that you and your loved ones will love doing together.
Second, try to include a variety of different types of activities, from traveling and vacationing to visiting new places and trying out new experiences.
And finally, don’t forget to add some classic holiday traditions as well!
KEY TIP… Plan Your Day Ahead: What are you going to do tomorrow?
How can you make your Christmas bucket list more meaningful?
When it comes to the holidays, many people want to do as much as they can.
The Christmas bucket list is often a great way to make sure that you’re able to check off all of the items on your wish list. But sometimes, we can become overwhelmed by all of the things that we want to do. This year, consider making your bucket list more meaningful by doing activities that will bring you happiness and joy.
Idea #1 – Be Happy
One way to make your Christmas bucket list more meaningful is by only including activities that truly make you happy.
For example, if decorating the tree or going shopping for presents isn’t really your thing, then don’t put them down as items that you have to do this year! Instead, focus on doing things like baking cookies with loved ones or taking a walk in the snow.
Idea #2 – Spend Time Together
Another way to make your holiday season more special is by spending time together over a fire. Whether you build one in your backyard or take advantage of one at a local park, this is a great opportunity for conversation and reflection.
Consider lighting the fireplace and reading a good book together–or having some deep conversations about what’s been going on in each other’s lives!
Idea #3 – Make an Advent Calendar
Making your own advent calendar is a fun way to get into the Christmas spirit. You can make it as simple or as complex as you want, but the key is to include activities that will get you excited for the holiday season.
For example, one day you might do an act of service for someone else, and on another day you might bake cookies!
Now, start brainstorming ideas with your family and friends.
Idea #4 – Get Prepared
Take time to figure out what kind of holiday experience you want, which helps narrow down the items on your bucket list.
Another way to make your Christmas bucket list more special is by preparing for Christmas Eve the night before. One great idea is to create a box filled with all of the things you’ll need for the following day. This could include pajamas, breakfast foods, and even some presents!
Use the printable to prioritize which activities your family would like to do during the holidays.
Idea #5 – Make it Personal
Finally, why not add a personal touch to your Christmas this year?
Make your list as personal and meaningful to you as possible by only including activities that are important.
Instead of using store-bought wreaths and ornaments, try making them yourself! There are endless possibilities when it comes to homemade decorations, so get creative and have some fun!
This isn’t the time to make your season harder – only what you want to do.
What are some things you can do to make your Christmas bucket list more exciting?
There are many ways to make your Christmas bucket list more exciting!
One way is to add a variety of activities, from festive traditions to outdoor adventures.
You can also mix up the type of activities so that you have something for everyone in the family. Additionally, you can make a point to do new things every year and keep your bucket list updated.
This will help ensure that you have an enjoyable and memorable Christmas season.
What are some tips for making your Christmas bucket list more fun for everyone?
One way to make your Christmas bucket list more fun for everyone is to try and do something that is meaningful and fun for everyone in your family.
This could be anything from spending time by the Christmas tree together, to doing random acts of kindness this holiday season!
A great tip would be to have everyone include their top three ideas that make the family Christmas bucket list.
All in all, you want to start Christmas traditions that the whole family looks forward to each and every year. This may be as simple as starting a new family tradition or making homemade gifts for your friends and neighbors.
Which Holiday Activities do you Need & Love?
So many ideas, right?
Your head may be spinning, but only put the holiday activities on your list that you want to do.
If you’re looking for something special to do this year, consider checking out one of the many Christmas productions around the country. From The Nutcracker to A Christmas Carol, there’s something for everyone.
And don’t forget about all of the amazing light displays – they’re definitely worth seeing!
It’s the most wonderful time of year, so you might as well make your family traditions more exciting by adding some creative tasks to what is normally a boring list of chores.
What are some of your favorite Christmas traditions? I’d love to hear about them!
For more inspiration, check out our Christmas Pinterest board.
Merry Christmas!
Also, it might be time to start thinking about what do I want for Christmas?
Know someone else that needs this, too? Then, please share!!
While there are a few different types of life insurance policies available, they fit into one of two umbrellas: term life and permanent life. Term life insurance is almost always cheaper than permanent life, as it provides coverage for a pre-established amount of time and lacks a cash value component. However, term life policies can be fitting for a variety of circumstances if the death benefit is only needed for a set number of years. Knowing how term policies work can empower you to make an informed decision when shopping for new coverage. Bankrate’s insurance editorial team breaks down term life insurance to help you better understand if this policy type is right for you.
Key takeaways
Term life insurance only stays in effect for a predetermined number of years —usually between 10 and 30 years — unlike permanent life policies.
Term policies are around three times cheaper than permanent life insurance, on average, because the chance of a payout on behalf of the policyholder is less likely.
99 percent of all term policies never pay a death benefit, because most term policyholders stop paying their premium, causing their policy to lapse.
If you want to see a return on payments towards a term life insurance policy, you may want to look into conversion riders or return-of-premium riders.
What is term life insurance?
Term life insurance is a type of life insurance policy that lasts for a predetermined number of years rather than your entire life. When purchasing a term life policy, you’ll choose a policy term, most commonly between 10 and 30 years.
To help understand how term life insurance works, imagine you purchase a 10-year term life insurance policy. During that decade, you would pay your monthly or annual premium on time. If you were to pass away within that 10-year period, your beneficiaries would receive the policy’s death benefit.
If the insured does not pass away within the policy term and the coverage expires, the policy would end and the beneficiaries would not receive a death benefit when the insured passes away. However, there are exceptions to this scenario. Many of the best life insurance companies offer specialized riders, like conversion and return-of-premium riders, that tweak the way term life insurance policies work. If you are purchasing term life insurance, you may want to speak with your agent about what riders are available for your specific policy.
Typically cheaper than permanent life insurance
No cash value component or investment potential to build wealth
Conversion and return-of-premium riders may add flexibility and peace of mind
Only covers a specified time period
Gives families the ability to cover significant financial liabilities that will eventually expire after a set period of time, such as mortgages and tuition
Sunk cost if you outlive the policy
Advantages of term life insurance policies
When choosing life insurance, it’s important to know how term and whole life insurance policies compare. Term life insurance has a couple of key advantages that make it an attractive option for those who need a larger death benefit for a specific period of time. It is typically the cheapest type of life insurance, especially for younger people or new parents. The larger death benefit at a reasonable price can provide for children dependents if something happens to the parent(s) earlier than anticipated.
Many financial planners encourage people who buy term life insurance to invest the money saved from not purchasing more expensive permanent life insurance. For policies with level premiums, the cost will not increase with age for the policy’s life as it does with some other life insurance options.
Learn more: Compare life insurance quotes
Disadvantages of term life insurance policies
Term life insurance does have a few limitations to keep in mind. For example, term life insurance policies pay out a death benefit when the insured passes away, but these policies do not include a cash value account. Whole life insurance policies, on the other hand, typically include a cash value account that may accumulate limited interest and capped returns. Some permanent life insurance policyholders use their cash value accounts to build wealth, but that option does not exist with a term life policy.
Another potential downside to having a term life insurance policy is that it only remains in effect for a certain period of time. Because policyholders can outlive their policies, there’s a chance that the death benefit will never be paid out. In fact, a study done by Penn State University indicates that 99 percent of all term policies never pay out a death benefit. However, that’s because most term policyholders don’t pay their premiums and let their policies lapse, not because they outlive the policy term, according to Entrepreneur.
Learn more: Best term life insurance companies
Types of term life insurance
There are several different term life insurance options, and some offer more guarantees than others. Usually, the more guarantees the policy offers, the more expensive the policy is. Here is a breakdown of the major types of term life insurance policies:
Level term insurance: Both the premiums and the death benefit remain constant over the policy’s life with this form of term coverage. Level term insurance usually lasts for anywhere from 10 to 30 years.
Decreasing term insurance: This type of term insurance, usually used to cover a shrinking debt such as a mortgage, is typically less expensive because the death benefit slowly decreases over time.
Guaranteed renewable term insurance: This type of term coverage allows the policyholder to renew the policy at the end of the term without having to undergo a medical exam or prove insurability again. It is generally more expensive overall, and it is important to note that the policy premiums will still increase with each successive term. A yearly renewable term is a form of guaranteed renewable term coverage.
Convertible term insurance: If you purchase a conversion rider and outlive your policy term, your coverage would turn into a permanent life insurance policy. Typically, you will not have to undergo another medical exam during policy conversion. Keep in mind that your premium or death benefit amount will change based on your age at the time of conversion. For example, if you wish to continue paying around the same premium, your death benefit would decrease, whereas you’d pay more to maintain around the same death benefit.
Return-of-premium term insurance: Some policyholders may be worried about signing up for a term policy, outliving their term and “wasting” the premiums they paid over the course of the policy term. This specialized rider provides a partial or full refund if you outlive the policy term. However, the rider will cost you extra during the policy term.
Riders for term life insurance
A standard term life insurance policy may not cover certain events such as critical illnesses, financial protection for your loved ones after you pass, and more. A rider, also referred to as an endorsement, is an optional type of life insurance coverage that can be added to your existing policy. It can be beneficial to add a rider to cover some of the gaps in coverage in a term life insurance policy. Here are three riders that are available for term life insurance:
Child term rider: This is only available for term life insurance policies. A child term rider provides coverage if your child passes away before a certain age and would pay out a death benefit. Additionally, this rider enables the term policy to be converted to a permanent policy without needing a medical exam.
Return of premium rider: For an additional fee, this rider ensures you receive back the money you paid into the policy if you don’t pass within the policy’s term. If the policyholder passes away before then, the money would be paid to the beneficiaries listed as normal.
Waiver of premium rider: If you become critically ill, injured or disabled and cannot go to work, a waiver of premium enables you to pause your monthly premium until you’re able to go back to work. However, qualifying scenarios are determined by the particular insurer. Additionally, with this rider you are typically only covered up to a certain age — usually your retirement age.
How much does term life insurance cost?
Term life insurance premiums are calculated based on the age and health of applicants. Because of this, pricing for a term life insurance policy varies but is typically significantly cheaper for younger applicants. Keep in mind that age and health are the main determinants of your premium, though you may still see some variance if you get quotes from multiple life insurers.
Comparing life insurance companies may be most helpful when you focus on what type of policy riders are available, how positive the customer satisfaction may be or what the insurer’s financial strength ratings are compared to other insurers.
Learn more: Affordable life insurance companies
Will I get my money back at the end of my term?
Unless you purchase a return-of-premium term life insurance policy, you will not get any money back at the end of the term. Paying premiums without receiving a death benefit is one of the potential disadvantages of purchasing term life insurance. A return-of-premium rider would increase the cost of your term life insurance, but would allow you to recoup a portion or all of your paid premiums. If you want to receive money back in the event that you outlive your policy term, you may want to discuss this option with your life insurance agent.
How much term life insurance do I need?
Deciding how much term life insurance you need hinges on your financial goals and specific situation. For instance, a parent of a young child may want to purchase a life insurance policy with a 15-year term. A term of this length could make the most sense as it could ensure that their child will be financially secure if the parent passes away while the policy is in place.
On the other hand, a childless couple with 10 years left on their mortgage may only want a term life insurance policy to be active while they are still paying off their home.
Some other factors to consider when determining your life insurance coverage needs include:
What is your yearly income and what are your expenses? How much room do you have in your budget for life insurance?
Are you the sole breadwinner? If not, does your spouse or partner make enough to cover your family’s current and future expenses if you aren’t there?
How many children do you have, and what are their ages? Do you plan to cover their higher education costs?
Are you a caretaker for any disabled family members?
Do you have a mortgage or other debts? If so, how many years will it take to be debt free?
How much financial help would your spouse need to keep your home afloat if you passed away?
It’s essential to consider your coverage needs to keep your life insurance premium within budget. If you carry too much coverage, you could find it challenging to keep up with your life insurance bill, putting yourself at risk of policy cancellation. If you don’t have enough coverage, your beneficiaries may struggle financially after your death. A life insurance calculator can help guide you on your life insurance shopping journey, as can a consultation with a certified financial planner.
Frequently asked questions
At the end of a term life insurance policy’s term, most plans will expire; however, policyholders may have the option to either renew the policy for a predetermined term of their choosing or convert the policy to a permanent plan, if they have elected these options at the onset of their policy. While letting the plan expire in most term policies means losing the money paid into premiums, some providers offer “return-of-premium” options that allow people to pay higher premiums in exchange for the option to have some or all premium payments returned if they outlive their term.
While it is possible to take out a life insurance policy on someone else, there are some stipulations. For instance, there must be insurable interest between the person purchasing the policy and the person being insured, such as business partners, spouses, parents or children. The person purchasing the policy must prove that the death of the insured person would have an adverse financial impact on them. Additionally, the insured person would also need to provide their consent, as you cannot take out a policy on someone without their knowledge or agreement.
Choosing a life insurance beneficiary is a personal choice. Many choose spouses, children, parents or a trust for the benefit of a family member to be their life insurance beneficiaries, but no rules dictate that these are your only options. Your life insurance beneficiary doesn’t have to be a person at all — you can choose to list a church or charity as your beneficiary if you wish. One of the most important things when selecting a life insurance beneficiary is remembering to do it. Forgetting to name a life insurance beneficiary can cause financial hardship for the person (or people) you thought would be collecting your death benefit.
I had dinner with two friends from high school last night. We shared good wine, good food, and, especially, good conversation. Much of our discussion focused on our shared history: the things we did twenty years ago (or 25!) that now seem as if they might have been done by a stranger. (Yet those strangers were us.) We talked about how we perceived money when we were younger.
Sparky and Stew grew up down the road from each other. I didn’t meet either of them until junior high school. Stew’s family was poor. They lived in a single-wide mobile home. His father built bar stools in the garage; his mother waited tables. “I remember your dad as an entrepreneur,” Sparky said last night. “I remember him building those stools. I admired that.”
“Yeah, he was a sort of entrepreneur,” Stew said. “He tried, but he could never really make a go of it. We couldn’t survive on the money he brought in making bar stools. In fact, he financed that operation on credit cards. We lived on the tips my mom brought home from waiting tables. It seemed like she was always working to get us money. She hoarded her money. She watched it. She had to make it last.”
“Huh,” said Sparky. “I never realized that. I mean, I knew you were poor, but I always thought of your family as wealthy. You lived in a trailer house, and you didn’t have much, but when I visited your house, it was an adventure. I remember sleeping outside in the tent —”
“That’s because we didn’t have room inside,” Stew said.
“I remember sleeping outside in the tent,” said Sparky. “I remember you seemed to live in a fantasy land. It was like your dad had a dream job. You had a basketball court in the woods. And a wiffle ball stadium. Plus you and your brother always did this wild, imaginative play. It was awesome.”
“But I didn’t learn much about money from my parents,” Stew said. “I learned more from yours. I remember going over to your house and marveling that you had opened a savings account. I remember that passbook you had, and how your parents would drive you into town to make deposits. I went home and told my mom that I wanted a savings account, but it never amounted to much.”
“I still have that savings account,” said Sparky. “The same account my parents opened for me when I was a kid is my savings account today. So, yeah, I guess my dad wasn’t an entrepreneur, but he did teach me a lot about money. He did some business on the side — raising produce, growing Christmas trees — but mostly what I learned from him was how to save. And how to invest. I watched how he invested his money and let it grow. He’s played a very active role in his investments, so in a way I think of him as an entrepreneur of the stock market.”
“I wish my parents had taught me some of that,” I said. “Whenever my dad had money, which wasn’t often, he spent it on toys. He didn’t save. He didn’t invest. I can’t remember that he ever invested a dime in anything. He bought computers and airplanes and sailboats. But then when he was broke, he turned around and sold them again. We were always poor because he couldn’t save his money.”
Sparky laughed. “I remember going over to your single-wide mobile home and being scared that I was going to fall through the floor!”
We all laughed. I said, “It’s still that way, you know. The box factory’s offices are in that old trailer house, and it hasn’t improved with age. We’re just too damn cheap to replace it. Our wives hate the place, and I can’t blame them. But it costs nothing for us to keep.”
Sparky nodded. “You know,” he said, “even though you were poor, and even though I was afraid of falling through that floor, I looked around at all the gadgets you had and thought of you as rich, too. Your family had a fancy stereo system. Your dad let you drive that Datsun around when nobody else in school had a car.”
We paused to order dessert, and Sparky continued. “It’s as if although your families were poor, you created a world of wealth out of nothing. Stew had this fantasy wonderland of imagination. J.D.’s family had gadgets that I envied.”
“And I envied you,” I said. “I remember going over to your house and thinking how amazing it was to have a nice normal home on a lot of property. I wanted that. I liked having gadgets, but I would have rather not lived in the trailer house.”
Our chocolate torts came. We began to pick at them. “One thing I’m glad of,” I said, “is that my father taught me about the entrepreneurial spirit. I’m glad to have had a chance to learn from him. I used to hate working at the box factory, but now I recognize that I would not be the person I am today without that experience.”
“Yeah,” said Sparky. “We look at ourselves now and wonder how did we get here? But it’s all a result of everything that we’ve seen and done. The girls I dated in high school. The decade I took off after college to travel around the U.S. and the world. Sometimes it’s frustrating that I’m 38 and only make $30,000 a year, but I look at the experiences I’ve had, and I look at who I am today, and I know that I would not be this person without everything that had come before.“
I smiled. “I just wrote about this subject today,” I said. “I’ll post it on Sunday.”
In Secrets of the Millionaire Mind (my review), T. Harv Eker writes that each person possesses a “money blueprint”, an internal script for dealing with money that comprises the lessons we learned in childhood, especially from our parents. This conversation with my friends illustrates this concept. My problems with money as a young adult were a product of the blueprint I inherited from my parents. They were modeling a relationship to money — they never realized what sort of effect it would have on me and my brothers.
Yet this blog is a direct result of that modeling, too.
This guest post from Sydney is part of the “reader stories” feature at Get Rich Slowly. Sydney blogs about personal finance, entrepreneurship, self improvement, travel and lots of other fun stuff on Untemplater.com. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.
It’s hard to believe it’s been about 20 years since my parents first separated, and it’s actually a blessing it happened when it did. No parent ever wants to put his or her child through the nastiness, heartache and sadness that comes with divorce, but having lived through my parents’ split, I can tell you that it actually can be the best option.
When I was a kid, I didn’t understand why my parents couldn’t get along. Neither one of them was mean or evil; they didn’t cheat on each other. They had jobs, loved me, supported my interests and activities, and they didn’t seem that different from my friends’ parents. Well, except for the arguing. It got really nasty toward the end of their marriage. There is absolutely nothing positive or healthy for a child of any age who has to live in a house with two yelling parents.
Money and debt drove my parents apart
I tried to avoid them when they were angry at each other, but it was hard not to listen to them even from down the hall with my door closed. What was the No. 1 thing they would always fight about? Money. Their finances were terrible. It wasn’t until I became an adult that I learned just how bad they were with money. Even though both my parents worked full time, they had low-paying jobs and a staggering amount of debt.
I’m convinced that my parents’ radically different views on money were main reasons they were incompatible as a couple. My mom loved to spend money that she didn’t have. She probably had about 20 different credit cards. My dad was pretty much the complete opposite. He was extremely frugal and did everything he could to save money by fixing things around the house on his own. He always found ways to reuse things, hated shopping, and could stretch a dollar in so many different ways. Every time he tried to talk to her about bills and budgeting, she’d try to brush off the ugly stuff and then they’d both end up blowing up.
Here are 10 things I want to share with you that my parents inadvertently taught me about love, work and money.
1. Don’t rush into marriage. Don’t tell them I told you, but my parents had a shotgun wedding and they started things out rushed and frazzled. They were lucky to be in love at the time, but they had no savings, and didn’t really know what they were getting themselves into. I didn’t want the same thing to happen to me, so I took my time finding and getting to know my soul mate. We openly talked about our relationship, goals and desires before deciding to settle down, and things have been incredible!
2. Talk about money while you’re dating. Being on the same page with your partner about money and financial goals is so important. I’m not saying you need to talk budgeting and financial goals in the first few months of dating someone, but if you want to take things to the next level, you owe it to yourselves to talk about money way before tying the knot. If you have drastically different thoughts on budgeting and saving, be forewarned this will bring a lot of stress and tension over time, and things could get very, very ugly.
3. Go to college and don’t expect your parents to pay 100 percent. My parents didn’t graduate from college, and this put a limit on their career paths and eligibility for promotions and raises. They were incredibly supportive of me going to college, and I was lucky to have paid for half of my tuition through financial aid and grants. Having to foot the other half of the bill myself taught me to be disciplined and work hard for good grades and internships. Paying for some or all of your schooling yourself is incredibly motivating and makes you really appreciate your education and the opportunities it presents.
4. Become financially independent. The fact that my parents didn’t have a lot of money was a big reason why I studied and worked so hard. I’m saving as much as I can and fighting hard to get paid what I’m worth. Being financially independent is an incredible feeling and gives you so many freedoms. I love the quote from Mary Schmich’s essay “Wear Sunscreen”: “Don’t expect anyone else to support you. Maybe you have a trust fund. Maybe you’ll have a wealthy spouse. But you never know when either one might run out.”
5. Avoid credit card debt. Credit card debt is bad. Just don’t do it. If you can’t afford something, just leave it in the store. I wish my mom learned this when she was young. Credit card debt has put both of my parents through hell. I shudder to think about how much money they threw away over the years in interest, fees and penalties.
6. Update your budget at least twice a year. My parents never made a budget when they were married. I, on the other hand, am crazy about budgets. I love tracking my savings and looking at my short- and long-term financial goals. The markets are always changing, so I also recommend diversifying your income streams and monitoring all of your investments regularly.
7. Don’t waste money on junk. I couldn’t even count how many car loads of clothes, books, household goods and junk I’ve donated to Goodwill over the years. A lot of it was from things my mom bought for me over the years, as well as stuff I accumulated in my 20s that I really didn’t need. I’ve adopted a moderate minimalist lifestyle now, and I’m happy not shopping. Instead, I take care of my things so they last. I have absolutely no interest in designer jeans, handbags or shoes. The money I do spend is on traveling, activities, helping my family and saving for an early retirement.
8. Have difficult conversations. My parents had a lot of problems communicating with each other and it brought so much stress and unhappiness into their marriage. I’ve learned that relationships build on trust and deep conversations. Relationships can also grow stronger through having difficult conversations and facing the awkward, scary, uncomfortable and unpleasant things head on.
9. Don’t quit your job without a plan. There were several times that my dad quit his job on the spot without anything else lined up; that really put our family between a rock and a hard place. I learned never to quit a job without a plan in place and another job waiting. It’s easy to take our jobs and benefits for granted until we lose them, and then we desperately need income and coverage. My advice is to calculate your cost of living and make sure you have at least 12 months’ worth in savings before making any radical career or life changes.
10. Think positively and help others. Keep a positive attitude whenever you can. You’ll be surprised how much better your life will become! We don’t need a lot to be happy. Look around you and be thankful for what you do have. I’m very grateful that my parents taught me to look on the bright side of things and help others. They weren’t always happy or trouble-free themselves, but they always took care of me and reminded me that even when things are bad, there are always other people out there who need help much more than we do.
Sometimes I wonder what life would have been like if my parents didn’t have all those money problems and stayed happily together. I know one thing, the holidays and visits would have been so much easier without having to shuttle back and forth! But I think their struggles led me to become the motivated, patient and independent person I am today. It’s what we learn from our experiences that make us better!
Save more, spend smarter, and make your money go further
Last week, I tackled two questions from fans of Mint.com on Facebook. This week, I’ll tackle three more.
Q1: How does having student loans really affect your credit “image” and at what point/value?
A student loan is just that… a loan. And, if that particular loan (or loans, if you’ve got several of them) is reported to the credit reporting agencies, then the same rules about how loans impact your credit scores are going to apply. The point being, you don’t get more or less “points” simply because it’s a student loan.
Student loans are installment loans, which means there is a fixed payment for a fixed period of time. Installment loans don’t have a huge impact on credit scores because they’re normally more stable than, for example, credit cards. The reason installment loans are more stable is because the downside to not paying them is more invasive than the downside to not paying credit card debt. For example, your tax returns can be affected if you don’t pay your student loans.
Having said that, student loans are a perfectly effective way to build a solid credit report. If you’re paying your debt on time month after month, then that will help you to establish good credit scores.
Q2: How do I get credit for paying my student loan that’s in my parent’s names? The lender won’t let me switch or refinance it.
Well, that is quite a conundrum. Basically, you’re paying off a loan that belongs to your parents and they’re the ones getting the value of your on-time payments. While it might seem easy for the lender to swaps names on the promissory note, it’s never that simple.
Here’s a solution: Take out a personal loan and pay off the student loans in full. This way, you’ll become obligated to pay back the loan, which will show up on your credit reports and it gets your parents out of the equation. There are some downsides to this strategy that you should keep in mind:
First, if the aggregate amount of your student loans is too high, then you might not be able to qualify for a personal loan large enough to wipe it out. Second, you are going to lose any tax benefit because interest on personal loans is not deductible and interest on student loans normally is. Finally, the interest rate on a personal loan is probably going to be much higher than the rate on the student loans, so the debt just became more expensive.
I’d suggest that you perhaps look at other solutions for building your credit reports and scores. There are many credit card options that won’t cost you a dime, as long as you pay the balance in full each month. Opening a card is the most cost-effective way for responsible consumers to build credit.
Q3: Are my student loans going to ruin my chances for a mortgage, even with no late payments and excellent credit?
Coverage of student loans has been pretty negative over the past few years, and for good reason. We’re now in $1 trillion dollars of student loan debt, which outpaces our credit card debt. Student loan debt can’t easily be wiped out with a bankruptcy, so we’re stuck with it until we pay it… or die.
Having said that, from strictly a credit reporting and scoring perspective, there’s absolutely nothing wrong with student loans. In fact, your student loans could be help your chances to qualify for a mortgage, especially if you’re paying them on time, which it sounds like you are.
The one thing you should keep in mind is how the debt impacts your “DTI” or debt-to-income ratio, which is the amount you’re obligated to pay relative to the amount you earn. The point being, even with solid credit scores, having too much debt of any type can disqualify you for a loan, even if you’re got fantastic credit scores.
The best thing you can do is to continue to pay your loans on time, month after month.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.
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In today’s fast-paced world, it’s common to live in a bubble. Many people can spend years living mere feet away from their neighbors without ever learning their names. This is especially true of residents who live in apartment complexes, where people frequently go straight to their units once they get home, rather than spending time getting to know each other.
There are many good reasons to get to know your neighbors. Here are seven that top the list.
1. Safety First
One of the most important reasons to know your neighbors involves safety. If you know your neighbors, they’re more likely to alert you in times of trouble, like an attempted break-in at your apartment, a potential theft of your car, or an unsavory character lurking about. In such cases, good neighbors will not only alert you but also call the police on your behalf.
2. Murphy’s Law
Just when everything is going along as it should, something throws a wrench in whatever you have planned—even if that’s just a good night’s sleep. Knowing your neighbors means you’ll have someone to run to when this happens.
For example, good neighbors can help with lockouts and dead car batteries. Who else will be willing to give your car a quick jump? If you need help shoveling your car out of the snow, assembling furniture, moving your dresser to the other side of the room, or tracking down the maintenance man, good neighbors can help.
3. Borrowing
Need to borrow $50? Maybe don’t ask your neighbor. On the other hand, if you need a cup of sugar, a few tablespoons of flour, a roll of bathroom tissue, or some aluminum foil, you may find your neighbors willing—or even happy—to accommodate you.
Having a neighbor willing to do this is far more convenient than running out to the store in the middle of baking a batch of cookies. Remember to be a helpful neighbor in return. These relationships thrive on give and take. Share those cookies!
4. Pet Sitting
If your apartment allows you to have pets, you may have a problem when it’s time to leave for vacation or go on a business trip. By getting to know your neighbors in advance, you can create a ready pool of people who might be willing to pet sit for you.
5. Babysitting
Babysitters are hard to come by, and while most parents have a few people to call when they need childcare, unexpected events can leave you without someone to watch Junior. A neighbor who is a stay-at-home parent or retiree may be willing to help in such circumstances.
In fact, if your neighbors have teenagers, you may find yourself with an impressive list of potential babysitters at your disposal. Do compensate them well for their time, however, even if they are happy to help. If your neighbors feel taken advantage of, they will be much less likely to help in the future.
6. Party Time
Good neighbor relationships have social advantages. If you get along well with your neighbors, they may invite you to parties and other events that get you out of your apartment. Sometimes, you might even throw parties together. At the very least, good neighbor relationships mean you’ll always have someone nearby to talk to and a weekend game of cards is just a door or two away.
7. Cooperative Efforts
Some things are difficult to accomplish by yourself. For example, organizing a town watch, setting up a new recycling program, or planning a community cleanup project requires the participation of interested neighbors.
Likewise, neighbors may band together to seek changes from an apartment complex’s management or even carpool to work. If you already have a good relationship with your neighbors before such a need arises, you’ll start one step ahead.
Whether you’ve lived in your apartment for years or are just moving in, now is the time to reach out and say hello to your neighbors. Developing a relationship now could save you headaches later and being neighborly can make your home life far more pleasant.
It’s hard to make the first move with a new neighbor. How do you break the ice? Add your tips to the comment section or tweet @AptGuide.
College will cost more for students borrowing during the 2023-24 academic year as federal student loan interest rates climb to heights not seen in a decade or longer.
As of July 1, undergraduates who take out new direct federal student loans will see interest rates rise to 5.50%, the Education Department’s Federal Student Aid office said Tuesday — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
Interest rates on graduate direct loans, available to graduate and professional students, will rise to 7.05% from 6.54% the year prior. PLUS loans, which parents and grad students can use to fill in education funding gaps, will jump to 8.05% from 7.54%. Here are the higher 2023-24 rates for each type of federal student loan, compared with the 2022-23 academic year:
2022-23 interest rate
2023-24 interest rate
Undergraduate direct loans
Graduate direct loans
PLUS loans
Undergraduate direct student loan interest rates haven’t been this high since 2013. Interest rates on direct graduate loans and PLUS loans, introduced with fixed rates in 2006, have never been this high.
Rising rates makes college pricier
Higher interest rates mean paying off loans will cost more. Each year, usually in mid- to late May, the government sets fresh federal student loan interest rates for the academic year ahead by adding the U.S. Treasury’s May 10-year note auction yield with an additional “add-on” percentage, which varies depending on loan type. The final rates apply to new loans doled out starting July 1.
Ultimately, charging more interest will make college more expensive for the millions of college students and their families who take out loans. Today, nearly 44 million people collectively owe roughly $1.6 trillion in outstanding federal student loans — and federal loans account for about 93% of the total student debt burden, according to a NerdWallet analysis of Department of Education and Federal Reserve data.
For example, if you start college this fall and borrow a total of $31,000 in unsubsidized federal direct loans (the maximum loan amount for dependent undergraduates) with a 5.50% interest rate, you’ll wind up paying back almost $50,000 under a standard 10-year repayment plan. If you’d started college in 2020-21 and taken out the same $31,000 federal loan with a record-low 2.75% interest rate, you would’ve had to repay around $39,500 including interest over 10 years.
The higher rates will apply to all students who take out new federal loans for college or graduate school in the 2023-24 academic year. It’s important to note that all federal student loans have fixed interest rates, so they won’t change during the repayment period.
Federal vs. private student loan interest rates
In recent years, federal student loans have offered lower interest rates (and fees) than private alternatives, but that may no longer be true for some borrowers. The average private fixed-rate undergrad student loan charges 5.99% to 13.78% in interest, according to a January 2023 NerdWallet analysis. As a result, private loans may start to look more attractive.
However, private student loans have drawbacks. They usually require a student to have a high credit score — or a co-signer with a high credit score — to qualify for the lowest rates. The co-signer, typically a parent, is equally responsible for the loan. Federal student loans don’t allow co-signers, and only federal PLUS loans require a credit check.
Federal loans also offer benefits like payment plans that cap monthly bills at a certain percentage of your income, temporary payment pauses if you lose your job or experience financial hardship, and loan forgiveness programs. Private loans don’t typically offer these protections.
Though federal interest rates still have room to climb, they could soon hit a ceiling. Under the Higher Education Act, rates may not exceed 8.25% for undergrad loans, 9.5% for grad loans and 10.5% for PLUS loans. Private student loan lenders have much higher maximum interest rates.
Submit the FAFSA to minimize borrowing
Minimize your total college debt — and the amount of interest you’ll pay over time — by maximizing funding sources you won’t have to repay, like scholarships, grants, work-study and other financial aid options.
You’ll need to submit the Free Application for Federal Student Aid, or FAFSA, to qualify for most federal, state and school grants. That includes the federal need-based Pell Grant, which, starting in 2023-24, can give students up to $7,395 per year in free money to pay for college. Scholarships also often require applicants to submit the FAFSA, including some offered by private organizations.
The FAFSA is open until June 30, 2024, for the 2023-24 school year, but don’t delay. Fill it out as soon as possible to increase your chances of getting more money. Some types of aid draw from limited pools and can run out.
My mother was quadriplegic by the time I was in high school. My dad was a real estate agent who worked on commission, so he worked long hours to make ends meet. As a result, I took on a lot of responsibility at a young age.
I cooked and cleaned and did all the grocery shopping. I did the laundry and paid the bills (in the “balancing the checkbook and writing the checks” sense, not the earning money sense). I took my mother to the bathroom, fed her, and tracked her pill regimen. And most importantly, I believed that a college education was a good value.
I knew my parents couldn’t afford to send me to college, and I wasn’t allowed to have a job because of my responsibilities at home. So in lieu of saving for college, I threw myself into everything school had to offer.
I was salutatorian. I was on the dance team and the academic team. I was secretary of the service club and president of the math club. And it worked: not only did I get out, I graduated from college with a 4.0. Then I went on to get an MA and a PhD. Unfortunately, I got $100K in debt to go along with it.
I mention this only because it begs the question: what leads a (relatively) smart person to make almost ten years’ worth of poor financial decisions? As immoral as universities may be, there’s more to any individual’s decisions than external influence.
Undergrad: An Auspicious Beginning?
When she was young and healthy, my mother had a full ride to Boston University. She dropped out because she wasn’t doing well in her pre-med classes; what she really enjoyed was writing. I remember asking her, “Why didn’t you just change your major?” She said it never occurred to her.
She eventually did get an Associate’s degree from the local community college. However, she always regretted not completing a Bachelor’s degree. Her experience led her to believe that the best degree was the one that you finished. She also believed that if you picked something you enjoyed, you were more likely to do well and be happy.
When I started thinking about college, my dad said “smart people major in business.” He suggested, “not that I’m telling you to follow in my footsteps, but female real estate agents make a lot of money.” My mom would nod sagely at his advice. Then after he left the room, she would stage-whisper, “do whatever makes you happy!”
I attended a state school, since the Florida Bright Futures lottery scholarship paid for 100% of my tuition and a book allowance. I was a National Merit Finalist. I received Pell grants and a variety of other scholarships. Since my education was paid for regardless of major, I followed my mom’s advice and did what made me happy. I was a creative writing major and a psychology minor. I worked as a server and a tutor at the writing center. As a result, I graduated with no debt.
Grad School: The Downward Spiral Begins
I was intimidated by the thought of graduating and getting a “real job.” Instead, I decided to keep doing what I had always been successful at: school. I started an MA in creative writing. I also worked on campus 35 hours a week, teaching and tutoring. However, graduate tuition was expensive. Luckily, Stafford was there to fill the hole. I knew it was a loan, but I’d never borrowed any money before. I didn’t have a concept of what borrowing really meant in terms of paying it back.
During this time I loved my job so much that I decided I wanted to run a writing center. My boss had a PhD in rhetoric and composition. I researched programs, applied to three, and accepted an offer from a top five program. It entailed moving across the country, which I couldn’t afford; I wouldn’t get financial aid until fall. Enter credit card debt.
The cost of living in my new city was also much higher. Again, Stafford and Visa filled the hole (though there were still a couple of weeks between moving and financial aid kicking in where I didn’t wash my hair because I couldn’t afford shampoo).
Yes, I was taking out more loans. But I was only making $14,000 a year and my paychecks were $750 apiece. The average starting salary of $50,000 was three and a half times what I was making. That could only mean my paychecks would be three and a half times bigger. Right?
Somehow the fact that this $14,000 was spread over nine months instead of twelve didn’t seem significant. Taxes and payroll deductions for things like health insurance weren’t even on my radar. I also don’t recall a single time when I saw a total of how much I’d borrowed until my degree was almost complete.
Graduation Approaches: I’m in Over My Head
Even when I saw my total of about $100,000, it was poor math all the way. I thought, Okay, I was in grad school for eight years. That means I borrowed an average of $12,500 per year. I was also making $14,000 per year during that time, so my average income was $26,500 per year. But soon I’ll be making $50,000. That’s twice as much! This is no problem.
My program also claimed it had a 100% tenure-track job placement rate. It didn’t occur to me that this couldn’t be possible until after I was advanced to candidacy and took a job search class. Then, this statistic was amended to “100% of students who wanted to be on the tenure track ended up with tenure-track jobs.” Who doesn’t want tenure?! I thought. This won’t be me. This is no problem.
I did know, of course, that getting a PhD in the humanities wasn’t going to make me rich (although the professors in my program all had 3000+ square foot homes in the nicest area of town). But it was more important to be happy than to be rich. Besides, I grew up poor. I was familiar with it. It didn’t sound scary.
Then I went on the job market. My hottest lead turned out to be in Punxsutawney, Pennsylvania, and I had a few realizations. I didn’t want to live 200 miles from the nearest urban center. Not only that, I couldn’t even if I wanted to: Jake and I had been dating for over a year. Our relationship was getting serious enough that he needed to be a factor in my plans.
By this time he’d graduated from law school and had a job making $90,000 per year. He was traumatized from the bar exam. The thought of taking another one only a year later gave him cold sweats. Even if he was willing to do it, he couldn’t afford to make much less. A salary of $90,000 a year would be impossible to come by in a tiny rural town. Now my job search was what they called Geographically Restricted. That’s academic speak for “it’s your own fault if you don’t end up on the tenure track.”
Suddenly, Unexpectedly
So I moved to Jake’s city and geared up for another year on the job market. I got a full-time administrative position in summer 2008, right before the economy tanked. The week after they hired me, my institution implemented a hiring freeze. Six months later, they instituted furlough.
I combed the national job lists in my field, but I was Geographically Restricted. Even if I wasn’t, it was one of the worst job markets in memory (and memory didn’t have a lot of good years anyway). And then, there was the unexpected — though, given that I think I’m psychologically predisposed to happiness, maybe I should have expected it.
It turns out I LOVE my job. I love the work I do and the people I work with. I love the city I live in (even if it’s 109 degrees outside right now). I have family in the area. Jake grew up here. At this point, he has over five years of business connections here, and I have four.
At some point, the the life I was living “for now” had become The Life I Want to Live. I have a ten minute commute. I leave work at 5 p.m. every day and don’t need to think about it until the next morning. I don’t check email during my off hours. I don’t work in the evenings. I have pets, I am a hobby chef, I read novels. I think I would have enjoyed the tenure track, but I don’t need it to be happy.
I just need to get our financial situation under control so I can keep living this life.
What About You?
This is my story. This is only my story. I cannot speak for others with student loan debt. But I know many, many people with high student loan debt (including lots of folks with totals higher than mine). So I know you’re out there, fellow student loan debtors!
Let’s build on last week’s discussion (go check out the comments there as well!). What’s your situation? How is it different than mine? How is it similar? I am especially interested in:
Your total student loan debt
What degree(s) you have
When you went to school
Whether anyone talked to you about student debt or the job prospects in your field
Whether the information you received about student loan debt or the job prospects in your field was accurate
What you wish you had done differently/advice for others
How you’re dealing with your debt
There are obviously many decisions I could have made differently. It’s undeniable. But since I can’t go back in time and make different decisions, I’m declaring a statute of limitations on regret. Plus, I’m taking responsibility for my errors in judgment and paying the loans back. I have to, since you can’t discharge student debt in bankruptcy.
However, as Robert Brokamp pointed out, there are systemic problems with student debt in this country (check out this paper for some facts on six-figure student loan debt). Those of you who have been through the system, how would you change it?