The news of James Kim's tragic death has started a long discussion in my family. We went through the recent news reports and slowly the conversation shifted to the subject -- are we prepared financially should a family tragedy strike?
A death of a loved one is a devastating event by itself. Finances is the last thing you want to worry about should it happen. What can you do to prepare yourself? Here are a few basic things that you absolutely must do:
- Calculate and know your net worth
Knowing what you own and what you owe will help you better understand where you stand financially
- Build an emergency fund
If you don't already have it, start putting aside a small amount each month to a savings account to cover at least 3 month of your living expenses
- Buy adequate insurance
15 year term life insurance contract with $300K coverage can be as cheap as $10/mo for a 30 year old non-smoker.
- Arrange for a potential loan source
Consider applying for a home equity line of credit. You don't have to use it now but having it handy when needed is very useful
- Record a living will
The service doesn't have to cost a fortune. If you are willing to spend a little more time you can do one online for as little as $20
- Keep accurate financial records
And that includes your spouse knowing where the records are
Should the tragedy happen here are a few resources that will help you coup with the situation:
I am probably half the way through that list above. What about you?