Your First Steps - III

Even if you maintain a joint checking account, never let the responsibility of making payments on time fall entirely on your spouse. A spouse’s history of late payments or non-payments can destroy his wife’s credit rating. It also takes seven years for poor credit information to fall off an account. By all means, maintain joint credit accounts, but make sure that they’re paid on time—and if they’re not, get your name off the account.

Visit the WISER (Women’s Institute for a Secure Retirement) Web site (www.wiserwomen.org) for more information, including steps you can take to establish and maintain good credit.

4. Assess your insurance needs and buy enough to protect yourself. There are four kinds of insurance every family should have: life insurance, homeowner’s insurance, health insurance and car insurance.

Life Insurance: When it comes to life insurance, it’s essential to buy enough to cover all of your debts, like mortgages and student loans, plus 20 percent if you die. The extra 20 percent is a precautionary measure to protect your spouse in case there isn’t an opportunity for employment, there are no other benefits, or any money on the way gets trapped in red tape. A few dollars more in a monthly premium will buy a lot of breathing room later.

Life insurance may seem like one of those things you are able to do without, but it can protect you from total financial ruin if the primary earner in the family is injured or dies. In addition, if you compare the premium to the benefit, it can be fairly cost-effective. If you’re on a tight budget, avoid whole life policies, which are essentially investment vehicles, and get term life, which will protect you for a specific number of years while
you’re financially more vulnerable, such as when your children are young. It won’t pay out a benefit after the term, but it is significantly less expensive than whole life, and by that time you could be more established financially.
Homeowner’s insurance is another “must have.” Paying the small monthly premium is nothing compared to losing your home and its contents in a fire or other disaster. If government-subsidized insurance is available, avoid the more expensive private coverage like flood insurance in coastal areas or near larger rivers, and earthquake insurance in California.
Health insurance is a problem for many lower-income families. If you cannot afford a comprehensive plan, consider a catastrophic health insurance policy to cover a medical crisis that could ruin a family budget for years to come. For example, having your appendix taken out can cost $15,000—and there’s no scheduling an appendix attack.
Finally, car insurance is mandatory. If you’re going to drive, insure your car. Period. If you have a homeowner’s policy, you may be able to get an umbrella policy covering your car and your house at a cut rate.