Widowed With No Life Insurance

Melissa's husband passed away two weeks ago due to an aneurysm. They didn't have life insurance, but she does have about $10,000. Dave helps Melissa decide what steps to take next.

QUESTION: Melissa in Alabama and her husband married in November 2010. They began their debt snowball shortly after that, but he passed away two weeks ago due to an aneurysm. They didn’t have life insurance, but she does have about $10,000. She has one $5,000 car debt, and he had a student loan debt. Dave helps Melissa decide what steps to take next.

ANSWER: You are not liable for the student loan. I would just send Sallie Mae a copy of the death certificate and let them know that this loan won’t be paid and there were no assets. Student loans are forgiven anyway, but it’s a whole process and a big problem to get them to be forgiven. In your case, I wouldn’t go through the process. There’s no point. There’s nothing they can get. He didn’t have anything for them to get.

Basically, we have $10,000 cash and a $5,000 loan. You’d be looking for an entry-level job to replace the job you were doing together if you choose not to stay in that work. The bottom line is it isn’t a huge pay scale, so it’s not as hard to replace. If you choose to go do something else and make $30,000, that wouldn’t be that big of a leap.

What I try to do in these situations is I try to do as little as possible until the waves of grief pass. It’s okay to not pay the car off and hold the $10,000. It’s also okay because it’s not a big bunch of money or a big deal just to go ahead and pay the car off and have $5,000. There’s really only one decision to make. That’s it. Either one—either decision for today—is okay.

It’s an okay move to just hold the cash and see what the medical bills do and see what the career does. Once you’ve settled the career and settled the medical bills, you’ll know how much cash you’ve got left and be more comfortable with paying off the car at that point. Just take your time. Don’t make any huge big decisions. Avoid making big decisions right now if you can. I think you can avoid it. What we’re saying today is we’re deciding to do nothing on purpose. That’s okay—especially right now this week.

And to all my listeners, just in case you were whining about your sore knee today … That’s part of what this show does. It does it for me every day that I do it, but it does it for you too when you’re listening, doesn’t it? What’s the “it” that it does? It gives you perspective. And it makes you learn lessons. If you’re out of debt and you’ve been working a plan, it sure does make hard times easier, which is what Melissa was saying. It also underscores and highlights the need to get to zanderinsurance.com and get term life insurance. For $20 or $30 a month, you can buy hundreds of thousands of dollars of coverage for a 30-year-old. It’s not much money at all. It changes a whole situation like that dramatically for the cost of a pizza a month. You’ve just got to sit down and do this stuff, people. They were doing a lot of smart stuff there. They really were, thank goodness. I’m thankful they were. What a tough thing that lady is facing.