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Is prepaid legal a good or bad idea?

Dear Dave,

My question is simple: I am looking into prepaid legal insurance. Is it a good idea or a bad idea? Would you give it a thumbs up or a thumbs down?

Carl

Spokane, Wash.

Dear Carl,

I would say I am anywhere from medium to cold on the issue of prepaid legal insurance. Let me tell you how I get there. It is not a bad thing. I wouldn’t call it a rip off. It usually costs anywhere from $18 – $25 a month, and most of the time you get a free will out of it, which usually costs around $300 bucks, so you’ll get your money back in the first year, which is nice. This also encourages people to get a will, and that is a very good thing because 70 percent of the public dies without a will, which I still don’t understand why anyone would not have a will, but that is another topic all together.

But will I recommend that the average Joe and Suzy buy it? I probably would not and here is why: $25 a month is $300 per year. Over ten years, that’s $3,000. My contention is that the typical Joe and Suzy American will not have $3,000 worth of legal needs or average expenses in a given ten-year period. If they did prepaid legal would be losing money, there would be no profit in it. And I don’t think they are in the business of losing money.

So as a consumer advocate I would say self-insure through the issue. And I just can’t get past that fact, even though I have pretty good feelings about the whole thing. So if you go out and get prepaid legal insurance, we will still be friends, but I just don’t think you can cost justify it.

Dave


Combine budgets before marriage for practice?

Dear Dave,

I just recently got engaged. My fianc? and I live separately and we don’t own any mutual property, but we are looking at trying to put our money on the same budget. We are not going to combine our money yet but we just want to practice a budget together so that when we do get married in a few months, we will know what we are doing. Is that a good idea or will we be adding unnecessary stress to our lives?

Brian

Oklahoma City, Okla.

Dear Brian,

I think it is a great idea. But after you have practiced and pretended that your money was combined, you shouldn’t go pay any of her bills, and she shouldn’t pay any of yours until the wedding ring is on the finger. Once you are married, all of the bills and all of the debt is now ‘our’ debt. Along with ‘our’ income, ‘our’ problems and ‘our’ solutions. You will be combining everything at that point, and having practiced that you will be better off.

Now I will warn you not to live in a fantasyland when you are practicing your budget. One of the biggest lessons while doing a budget with your spouse is learning how to let the other person have some input and win sometimes. You have to learn to back off a little bit and let the other person have a say. That is a great thing to practice prior to getting married. Both of you. Make sure you are having a discussion, a give and take when you are practicing your budget, because believe me it will be a part of the real thing once you are married.

Doing a budget together is a good practice for learning how to give and take in all the other areas of your married life as well. You will be sitting down and agreeing on where every dollar is going to go before the month begins. It is setting a good foundation for you guys to start agreeing on your goals and dreams. So practicing is good for now, and paying all the bills on paper is a great idea, but remember, you are paying your own bills and she is paying hers until you get married.

Dave


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