Be Very Kind and Very Grateful
Laura says her parents took out a whole life insurance policy for Laura when she was born. Laura wants to cash it out and apply it to the debt snowball, but she's worried she'll offend her parents.
QUESTION: Laura in Dallas says her mom and dad took out a whole life insurance policy for Laura when she was born. The cash value is $2,500. Laura wants to cash it out and apply it to the debt snowball, but she’s worried she’ll offend her parents. Dave has a little bit of tough love for Laura.
ANSWER: It’s up to you what you want to do. It’s not enough money to change your life one way or the other. But basically, how many toxic things are you going to do because it offends them?
This is toxic. It’s financially toxic. It’s a bad product, and you’re going to keep it only because it offends them. At some point in your relationship and in your husband’s relationship with your parents, your parents have to allow you to live your own life. That means you should be able to sit down with them, adult-to-adult, and say, “I understand that you all think very highly of whole life. I’ve learned a lot about finance in the class that I took and the book that I’ve read—books I’ve read—and we’re going in the term life direction, and we’re going to free up the money and apply it toward our debt. We’re not going to be wasting the money. We’re not going to be doing anything else. We’re cleaning up our debts. We’re living on a budget. We have a plan. And we’re not doing that in any way to be disrespectful to you all, and our hope is that you’ll understand that while you don’t agree that whole life is a bad thing that that’s what we think it is and that you won’t be upset with us for doing that, but we’ll be cashing it out.”
You’re just very clear with them. You’re not trying to be disrespectful. And then if they choose to have a little emotional moment or something, then that’s really their issue at that point. That’s not your issue. That’s the way I look at it, but you can be very kind and very grateful for the thing and if they want the money back, you’ll give it to them. Whatever. But we’re not going to keep the policy.