I struggled with a title for this post - but basically what I'm talking about is all of those bills we have - for TV, phone, internet, radio etc. that starts off at a promotional rate, and then creeps up in price over time.
I don't have a set schedule for it, but at least a couple of times a year I call up our service providers to make sure we're paying the best rates for our services and see if I can negotiate better prices.
Today I called up Shaw (TV/Cable), Bell (cell phones), and Sirius (satellite radio) - I had no joy with Shaw and Bell - but I had great success with Sirius.
We got our satellite radios when we purchased our cars - of course it was free for the first six months and then there was a fee for it afterwards...but I didn't really look at the details until now.
We had been paying $190.84/year for one of them and and $119/year for the other...what?! $310.88! So I asked if we bundled them what pricing deals he could offer - and the agent came up with $294/year ($175+$119) - I told him $300 for radio was just ridiculous, commercial free or not, and asked one more time if there was anything he could do to get me better pricing.
and he did.
We renewed the account for $120 for the next year! Saving over half the price if I hadn't made that phone call.
That's pretty good for only 15 minutes of time over my lunch break on a Friday.
Quite a few of you know that Jordan and I are based out of Alberta, and some of you may know that we had some pretty intense hail storms here this past month (among others). We certainly didn't have it as bad as many people, but both the Escape and the house took some damage.
Here's a snapshot of Aries eating the hail off our our patio furniture...she was in heaven!
I don't have any good pictures of the vehicle or house damage - bad angles.
We've seen the adjusters for both the Escape and the House and are now just waiting for the damage estimates and the next steps.
From the sounds of it - we'll at the very least need a new roof and some new siding...and the Escape it's right on the cusp of being a total loss. We should know in the next week or two for sure.
There are a lot...a tonne of resources online around Life Insurance. Calculators for how much you should have, blogs on what kind you should buy (whole, term, term to 100, universal), and debates around insurance as an investment vehicle...not to mention the plethora of do's and don'ts articles out there.
So..I'm not going to recycle all of that and write something of my own, but entirely unoriginal, but I will share with you a couple of my favorite blog posts as well as what I think Jordan and I should do. I would also really appreciate your thoughts, and opinions of our plan.
We will not use life insurance as a way to invest
We will use life insurance to hedge our bets on the timing of our eventual deaths
We will, sometime in the next few years have children. Maybe one, hopefully three, probably two.
While our mortgage and other debts will decrease over time, and assets will increase over time - other financial needs (for eventual kids) will go up.
That while we both of life insurance through our employers, we may not forever and so this won't be counted on (mine is 3x salary, Jordan's is 1.5x salary).
Our intention with regards to life insurance is to leave one another with enough money so they have choices. The choice to move, or to stay. The choice to take as much time that is needed away from work to grieve. Our intention is not for either of us to have more money than they need - our deaths will not be a lottery.
Assets & Income
Current debts including mortgage, both vehicles, and the LOC is about $375K.
Removing our home and vehicles from the equation (because we want choices), our current assets are about $72K. This leaves a gap of about $300,000.
Okay...what else, well, we need to sort out other than the debts - what the loss of each other's income would do to our lifestyle.
Monthly Budget Needs
We both earn respectable salaries - and either of us could run the household bills without the others salary without the mortgage/car payments needing to be serviced. I have only to look at my stay at home mom/dad budgets to get an idea about income replacement needs. The fixed bills would be fine, but when I add in a childcare assumption as well as continued savings for emergencies/vehicles ect - things get a bit tight...and by tight I mean un-affordable. Have a look:
I would need about another $400/month, and Jordan would need about another $900/month.
Looking to Life Insurance Canada's website, endorsed by my favourite money author Gail Vaz Oxlade, I used the income replacement calculator to sort out how these monthly costs translate into insurance needs. To replace the $400/month for 20 years, Jordan's policy would need to be for an additional $87K. To replace the $900/month Jordan would need for 20 years, my policy would need to be for an additional $197K.
Something we'll have to ask an insurance broker is should we buy insurance assuming children - or wait until we have them and then adjust the policy, or buy another policy.
The Cost of Death
Okay...this one is sort of uck to talk about, but it's important too. For my dad for example, who passed just two and half years ago, we had a very modest reception in a community hall. The fees for the funeral parlor were just under $6,000 which included the rent of the hall and the incidentals associated with that. His headstone was around $3,000, and the cost of the plot in my home town was around $500. So $10,000 is not an unreasonable estimation.
Okay...so when we have kids I'll need a policy of around $500K and Jordan will need $400k - before kids I need a policy of around $310K.
What do you think? Are we ready to go to a broker, are there things we're not thinking about?
Yes, yes we have finally found a lawyer and set up an initial appointment.
We'll be looking at $700 + GST for $735 for Wills, Power of Attorney and Personal Directives. I have been advocating for both family and friends to have these documents in place...in fact, I have even used the words 'it's the greatest gift that you can give to your loved ones'....and 'it's a selfish thing not to take care of things so your loved ones don't have to'
I've said it so many times that I've been starting to feel like a bit of a hypocrite.
My Great-Aunt is an amazing example of how to stay on top of these....end-of-life documents, for lack of a more rosy-way to put it. She reviews and updates them at least on an annual basis. One of my grandmothers on the other hand has no will, no poa, no personal directive...nothing. She also is on the slippery down-hill slope of dementia and so there is no one who can legally speak on her behalf...now, I say legally because while I can't speak on her behalf I do advocate for her at every opportunity - but that's a story for another day.
It'll be a few weeks before the i's are dotted and the t's are crossed, but I sure can tell you that it feels great to get it started.
The Alberta Human Services department as a really good brochure on POAs that can provides a brief overview on the types of POA that exist. It came up in the comments from the last post; but I thought it was important enough to mention here as well.
First is the concept of 'enduring' a POA agreement by itself would cease to be effective in Alberta once the donor (the person for the the POA is for) becomes mentally incapacitated. An Enduring POA gives a few more options, namely it can take effect:
When the donor becomes mentally incapacitated, or
When some other event specified by the donor occurs.
It my great-aunts case - she chose to give me Enduring Power of Attorney, effective immediately. In doing so, she also has effectively voided the previous POA agreement that was in place with another relative of hers. By and large, my family is happy that I will be assuming the role. I am the closest blood-relation, with a very good personal relationship in the city...everyone else lives 3-12 hours away. So with regards for appointments with banks etc. I make sense as a practical choice.
...So, what does that mean? What are my new responsibilities under this agreement?
To act in her best interests - this includes a duty to protect her interests
To consult with her, and those who take care of her and with family and friends as appropriate
To keep accounts, and given an account when called upon to do so including: list of assets, assets acquired and disposed of, receipts/disbursements, investments bought/sold, liabilities, and payments - all with dates and a clear paper trail