As the legendary Alabama coach once said; “Offense sells tickets. Defense wins championships.”
If you need an example, just look at the Dallas Cowboys. Jerry Jones has successfully turned his team into a money making machine at the ticket booth. For a team that has been mediocre at best over the last 20 years, it has definitely not impacted ticket sales. He has found away to put just enough excitement into the game to sell tickets, but let’s face it, the team has been a bust for years. To back up this point, the Oakland Raiders and Tampa Bay Buccaneers have been to the big dance more recently than the Cowboys. On top of that, their divisional opponent New York Giants have won two out of three trips to the Superbowl in the last 20 years and don’t get near the attention the Dallas Cowboys demand.
This sounds like a great intro to a marketing blog….. “Three simple steps to make your mediocre product outsell the competition!”
It’s not though, I am the money guy. So let me get back on track.
Over the next few weeks I will be hitting on an often overlooked element to true Financial Peace and breakdown the insurance products that are crucial to a healthy financial plan. We talked at length about getting out of debt and freeing up our income so that we can truly build wealth. One key ingredient to not returning to debt is the emergency fund. It defends against a lot of emergencies that we face when it comes to home or car repair, but what about the really big stuff?
I like stats because they really put things into perspective:
The number one cause of bankruptcy in America is medical bills.
There are close to 30 million uninsured motorists on the road in America. (2.5 million in my current home state of Texas)
According to a study by http://www.lifehealthpro.com only 44% of households had individual life insurance policies as of 2010.
12% of the US population is disabled.
16.6 million Americans were victims of identity theft in 2014.
So let me ask you again, How’s your Defense?
You can be the worlds greatest saver and do a great job of handling your money, staying out of debt and building wealth (great offense), but if your defense can’t hold the other team at bay, you can still lose the game.
Let me give you an example. Let’s take a look at the state requirements for auto liability in the great state of Texas:
The required limits are 30/60/25. What does that mean?
Liability insurance is third party insurance. Your liability coverage kicks in when you hit another driver with your vehicle.
30/60/25 allows for $30,000 in medical expenses paid per person with a total of $60,000 for all the occupants of the car you hit, whether it is a single driver or a church van full of teenagers. The $25,000 covers property damage caused by you in an accident. It should cover the vehicle(s) you hit as well as any damage to the road, signs, guardrails, etc.
If you have been to a hospital lately, if you are seriously injured in an accident and have to stay overnight or end up in ICU at a hospital, $30,000 can accumulate in the blink of an eye.
At the same time, how many new cars are on the road that cost well over $25,000?
So what happens when you have this coverage and cause more expense than you are covered for? A lawyer is usually involved in bad accidents and they look at how much money you have and determine how much they want to sue you for. This can lead to your savings being taken, equity in your home, even garnishing of future wages!
What if someone hits you and has this coverage. Worse yet, suppose one of the 30 million uninsured drivers in America hits you? Do you carry uninsured/under insured motorists coverage? If you don’t have this coverage, you could be stuck paying off a car loan for a vehicle you don’t have anymore and still be in need of a new vehicle.
I don’t mean to scare you, I mean to prepare you. Insurance exists to take on the risks that are too great for you to handle and is a HUGE part of gaining Financial Peace in your life.
If you are like most hardworking Americans, the insurance section of your budget is most likely the largest expense category on a monthly basis. Do you know what kind of coverage you are paying for?
I will leave you with a homework assignment. Pull out your car insurance policy and look at your coverage limits. If you don’t have uninsured/under insured motorist coverage, add it! Take a look at your liability limits and ask yourself if I caused a major accident tomorrow on my way to work, is my coverage adequate?
Have questions? Leave it in the comments.
My name is Tim Parady and I am 36 years old. I was born in Connecticut, raised in Virginia, had a brief layover in Kansas which led me to Texas where I met my wife and best friend. We just celebrated 145years of marriage.
I have the best job in the world, which is to improve peoples lives. I teach people how to win in all areas of there money, which affects all areas of their lives.
78% of Americans live paycheck to paycheck, with no money in the bank and little knowledge of how to invest for their retirement. You can have a different future. You can win with money and I can show you how.
I am an independent Dave Ramsey Financial Coach,and Insurance Agent at Alkali Insurance and I am here to serve you. My goal is to provide knowledge and tools to change your life. To schedule an appointment to address your financial needs and goals, email me at firstname.lastname@example.org