QUESTION: Lynn in Lexington says her husband passed away on Valentine's Day. Her income has been cut by 50%, but she has two life insurance policies totaling $105,000. She can pay off her $17,000 in debt or refinance her home and use the money to pay down the mortgage. Dave tells her why she shouldn't make any decisions for a year.
ANSWER: You guys are similar to my wife Sharon and me in terms of age and how long you've been married. What I tell people is that I don't think I could breathe for a while, and I still think you're having trouble breathing. That just makes you normal. This is a blow. You are in the worst possible situation to make decisions.
I always tell people to make as few decisions as we can get away with until you can breathe a little. I would like you to make no major decisions for a year. Spend that year crying and clearing your mind getting the worst of the waves of grief behind you and not do big deals right now.
I'm the financial guy that everyone asks questions, and I wouldn't want to make decisions in the middle of that. If it were me, my brain wouldn't be working.
Let's cut off making biweekly payments on your mortgage and just make them monthly. That will free up some cash. Then just do as little as we can do right now. If you guys were already on this financial peace track and have already cut up the credit cards and know how to make a budget, then I think your budget will be all right if you use just a little bit of this money to pay off the credit cards and student loan.
Park the rest of it in a one-year certificate of deposit and don't do anything with it for the first year. See if you can take your income and his pension and just live on a budget that way without the house being on a biweekly payment.
Having your home paid off is a good plan, but let's wait. That's a big decision, so let's wait a little while and let some of this pass. You are in so much pain right now. Let's make a couple of little decisions and then put the thing in park. Just let it sit a while.