When to go debt-free and when to buy long-term care insurance

Dear Dave,

My mom died a few years ago, and she left me an inheritance of $60,000 in stock. She was always investing and saving money. I could sell this and be debt-free while still having plenty left over, but I feel like I?ll lose a part of her if I do this. Do you have any advice?

David

Dear David,

I didn?t know your mom, but from what you?ve told me, it sounds like she was a pretty smart and responsible lady. I don?t visualize her as the kind of person who would?ve said, ?I?m going to leave you this stock.?Always keep it and never cash it out, no matter what happens.?

A gift like this is someone wanting to bless another person with some of the good they accomplished in this world. It?s your mom?s way of giving you an opportunity to have a better life. In my mind, the best way for you to have a better life is to use the money to become debt-free then use the cash that used to go toward debt payment to invest.

I know you loved your mom, but I think you?ve given this stock more power than she gave it. You?ve gotten her blessing, and that was to be a blessing to you. You know, you can be a blessing to others in lots of different ways. She just accomplished it with the stock.

Honor your mom and go be debt-free?today. The time is now!

?Dave

Thinking long term

Dear Dave,

My husband and I are in our 60s, and we don?t have long-term care insurance. It would cost us $8,000 a year at this point, and our annual income is $200,000. Do you think we should get this type of coverage?

Toni

Dear Toni,

I?m a strong proponent of long-term care insurance?once a person turns 60. Prior to that age you have less than a 1 percent chance of spending time in a nursing home, so I wouldn?t spend a dime on it until then.

A lot of agents and companies try to sell long-term care insurance to people who are 40 or 50 years old, and I just don?t believe in that stuff. But once you hit age 60, your chances of using it increase almost daily. At that point, it?s a smart buy, and you?ll get a great return on the investment.?Eight thousand dollars annually is a lot of money, but nursing home costs can run $50,000 a year.

My advice, Toni, is to buy long-term care insurance. I believe in having this type of coverage, even if you can afford to pay for care out of pocket. It takes a lot of stress and worry out of growing older. Most ladies outlive their husbands, and a frequent scenario is that the man goes into the nursing home and drains the nest egg to pay for everything. Of course, this can happen the other way around, but I?m sure neither of you wants to leave the other in a bad situation.

?Dave

*Dave Ramsey is America?s trusted voice on money and business. He?s authored four New York Timesbest-selling books: Financial Peace, More Than Enough,The Total Money MakeoverandEntreLeadership. The Dave Ramsey Showis heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Source: http://www.gastongazette.com/spotlight/when-to-go-debt-free-and-when-to-buy-long-term-care-insurance-1.169059

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