Stick With The Steps

Mara says her husband can't get life insurance because he had cancer and now may need a heart transplant. They want to do Baby Step 6 before Baby Step 4 so that they're in a good position no matter what happens.

QUESTION: Mara in Raleigh says her husband can’t get life insurance because he had cancer and now may need a heart transplant. They want to do Baby Step 6 before Baby Step 4 so that they’re in a good position no matter what happens. What would Dave do?

ANSWER: Putting $13,500 in retirement is not going to delay paying off your house very much. It’s going to delay it some but not much. Maybe a year. It sounds like it’s a lot, but it’s really not. You’ve got other issues to be able to pay off the house very quickly. Just continue on the Baby Steps.

Here’s your worst-case scenario. Something happens to him, and you have too much money in your 401(k) and your house isn’t paid off. You’d have to take money out of the 401(k) and pay off the house. Oh, darn. That’s your worst-case scenario on $13,000. It’s not much is my point. It’s not life-changing for you in your situation. If it were a huge portion of your income or something else, then we’d have to think about it.