If you really want to get rid of debt, you absolutely need a plan of action. You will need to start or continue to budget, stop adding new debt, build your emergency fund, cut corners while also trying to increase income. However, the one thing that is often overlooked when trying to get rid of debt is insurance.
Insurance is extremely important to protect yourself while trying to get rid of debt. Sadly, people lessen the amount of insurance they carry due to the premiums they pay each month, deciding to put this extra money towards debt instead of being insured. This is a very big mistake! Unless you have a very large emergency fund saved up, you absolutely need insurance, in every area, it is also important to go above the minimum to make sure you are adequately protected.
In most states, the minimum car insurance requirements are liability only. This may make sense if you have a beat up car, that gets you from A to B, and you would have no intentions of fixing this vehicle if you did happen to get in an accident. If you would want to get this car fixed, or you have a custom stereo system, custom paint job, or anything of value that would be expensive to fix, then paying the extra amount for full coverage makes sense.
It makes absolutely no sense to try and go without any insurance in order to save the amount of the premiums each month. First of all, it is illegal, if you get a ticket for no insurance you face extremely hefty fines. These fines double, triple, and eventually lead to jail time. This will only contribute to your financial problems, making it even harder to get rid of debt. Another possibility is, you accidentally hit someone, now you have thousands of dollars you need to pay for damages.
Getting AAA is an investment really, I can’t tell you the amount of money I have saved by having it! Not only do they come unlock your door when you lock your keys inside, saving a tremendous amount of time trying to open the door with a hanger, you also get free tows, important if you have an older car that breaks down often. If you have the premium account, and you go on a road trip, if you get delayed for any reason, weather, road conditions, illness, accident, they will pay for your hotel, meals, and time missed up to $1,500! There are also travel discounts, they bring you gas if you run out, the benefits are so great that it makes absolute sense to have AAA.
Renters insurance covers all your personal belongings in case of theft, fire, floods, and so on. You can add renters insurance to your automobile insurance for just a few dollars more a month.
If your employer offers health insurance, then take advantage of this. There are going to be times when you need to go to the doctor, no matter how healthy you are. If you can’t get insurance through your employer, don’t use this as an excuse. You can try and get government funded programs, if you don’t qualify, then get private insurance.
This should be considered a must! I used to use the excuse of “I don’t get insurance through my work, I don’t qualify for any programs, I can’t afford private insurance.” That was I before I racked up over $9,000 in medical debt. Contrary to popular belief, medical debt does count against you. It does reflect negatively on your credit report.
There are many other forms of insurance you can and should get, in addition to the ones listed above. Until you have a large enough emergency fund saved up, don’t let yourself be unprotected against the things that are out of your control or any accidents. If you can get insurance on something, get it. Cover yourself whenever you can.
Whether you realize it or not, not getting insurance will only hurt your financial situation further in the future, if something happens. The one time that something does happen, you will only be put further behind. You can plan for the premiums, you can add insurance to your budget. Until you have enough saved to cover any accident, insure yourself! Over insure yourself, if you don’t, your efforts of bettering your financial situation may be trumped, making it extremely difficult to get rid of debt.