• Here lies the body of William Jay
• He died maintaining his right of way –
• He was right, dead right as he sped along,
• But he’s just as dead as if he were wrong. Boston Transcript, date unknown

Kate and Ernie followed all of the financial rules that the media and their advisors gave them; max out the 401(k)’s, keep a large mortgage on the house and invest the equity elsewhere, three to six months emergency money is enough, the “market” is reliable, buy term insurance. Then, life delivered a knock out blow. First Ernie lost his job to a plant relocation and a month later Kate got laid off after a merger. OK, they had 6 months of expenses saved up and their severance and 401(k)’s were there if they needed them.

After a couple of months of no work and no income Kate was diagnosed with teminal cancer. Over the next year most of the assets that the couple had acquired went to treatments that were not covered by their insurance. They cashed in the investments that they bought with the equity in their home, got behind on the mortgage, lost the cars, spent the emergency money, dipped into the 401(k)’s and ran the credit cards to the limit. Kate died at the age of 29 and Ernie was broke and filed bankruptcy at the age of 30 – the term insurance was the first thing they dropped to control their spending when they first got laid off.

Blindly following rules about money is just as foolish as following the “rules of the road” when doing so puts you at risk. What if Kate and Ernie had chosen to think through their decisions about money instead of just doing what conventional wisdom dictated. What if they focused their energy on building a foundation of money that was entirely under their control and that supported the Four Pillars that are the framework of every successful personal economy.

I can’t give all the details in a blog post, but in summary, if they had paid their mortgage down over the seven years that they had it and even reduced it with the few bonuses and gifts they received, they would have had access to almost three years of living expenses with an equity line of credit. If they had put some of the money that they were contributing to their 401(k)’s into cash value life insurance they would have had an additional two years of living expenses and, more importantly, when Kate was diagnosed with cancer the policy’s waiver of premium benefit would have taken over her payments; when she died Ernie would have recieve a large tax free death benefit and repaid all of the money he had borrowed and recovered most of what he liquidated.

Money for Life can change the story of your life…in good times and bad. See yesterdays post for a great offer and go to www.TheMoneyForLifeBook.com to take advantage.

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