DIY Financial Plan Part 2: Debt & Emergency Planning

Summary

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Frugal Friends Podcast – Episode Summary

Podcast: Frugal Friends Podcast

Hosts: Jen Smith & Jill Sirianni (Backyard Ventures)
Episode: DIY Financial Plan Part 2: Debt & Emergency Planning
Date: August 7, 2026

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Episode Overview

This episode is the second installment in a four-part series guiding listeners to create their own financial plan. Jen and Jill zero in on debt and emergency planning—helping listeners break down debt payoff strategies and emergency fund essentials, all while weaving in the practicalities of real-life decision making, emotional responses to debt, and insurance must-haves. Their aim: demystify these crucial financial pillars so you know when you can DIY—and when it’s time to call in a professional.

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Key Discussion Points & Insights

1. Series Structure and Purpose ([01:50]–[04:39])

• The four-part series tackles:
  • Part 1: Financial goals & budget planning
  • Part 2: Debt & emergency planning (today’s focus)
  • Part 3: Retirement planning
  • Part 4: Money-saving systems
• Jen and Jill stress the value of a DIY financial plan for all stages of personal finance, offering resources including a free Google Sheet: frugalfriendspodcast.com/plan.
• For those needing professional help: frugalfriendspodcast.com/CFP

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2. Tackling Debt: Psychological, Emotional, and Mathematical Approaches ([05:04]–[13:28])

• Paying Off Debt: Real Stories
  • Jen: “My husband Travis and I paid off $78,000 of debt in two years.” ([05:39])
  • Jill: “We paid off $60,000 of debt in seven years. We took a much longer time, but we did it.” ([05:43])
• The Three Aspects of Debt
  • Mathematical: Start with highest-interest debts (usually credit cards or personal loans above 10–15% interest).
    • “If you have credit card debt, that needs to be your number one priority to pay off before anything else.” – Jen ([08:36])
    • “Financial liquidity should not be ignored in pursuit of debt freedom. That's how you end up putting emergencies on credit cards.” – Jill ([07:19])
  • Psychological: Leverage quick wins via the “debt snowball” (paying smallest balances first) to boost motivation.
    • “Small wins as quickly as possible have a big impact on whether you stick around long enough to achieve bigger wins.” – Jen ([09:29])
    • “Having these small wins psychologically primes us to believe we are capable of bigger things.” – Jen ([10:07])
  • Emotional: Recognize how specific debts feel—regret, guilt, gratitude, anxiety influence your priorities.
    • “Sometimes for us, it's just better to get rid of it, even if it's a low interest rate, because we don't like how it feels.” – Jill ([11:33])
• Developing a Debt Plan
  • Write down all debts and identify:
    • Math: Interest rate and urgency
    • Psychological: The motivational impact
    • Emotional: The weight or baggage each carries
  • “I would write down your debt and I would also write down, like, math, psychological, emotional, and under each of those I would write, how am I feeling about [it]?” – Jen ([12:01])

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3. Emergency Fund Foundations ([15:19]–[19:16])

• Starter Emergency Fund
  • Recommended: $1,000–$2,000 as a bare minimum
  • Alternatively, use your health insurance deductible as a benchmark if higher
• Building a Full Emergency Fund
  • General guideline: 3–6 months of bare bones expenses (not including full entertainment or discretionary budget)
  • Three Months: For dual-income households (with diverse income streams)
  • Six Months: Single-income, or dual-income in the same industry
  • “If there is job loss...maybe both of you are getting laid off. So keep in mind some of the volatility of the careers that you have.” – Jill ([18:17])
• Where to Park Your Emergency Fund
  • Must be liquid (readily accessible and penalty free)
  • Use a high-yield savings account—online banks (like CIT) tend to offer the best rates ([20:48])
    • “We are not looking at our emergency fund every year...if it’s not earning anything, the purchasing power actually goes down every year.” – Jen ([21:07])
    • “You can be sure that the purchasing power of your emergency fund is preserved with that high yield.” – Jen ([21:49])

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4. Emergency Planning: Insurance Basics ([22:10]–[34:36])

a. Health Insurance ([22:10]–[24:42])

• Must-Have for Everyone:
  • If not available via employer, consider healthcare sharing plans (e.g., Liberty, Zion).
  • “Even if you’re healthy, you hardly ever need to go to the doctor. You do need to have health insurance.” – Jill ([22:34])
• HSA Eligibility: Now possible with some healthcare sharing plans.

b. Auto Insurance ([24:47]–[26:08])

• Tip: Consider increasing liability coverage above state minimums ($100,000 recommended)
  • “For serious car accidents [state minimums] literally just scratches the surface. You could be liable for so much more.” – Jen ([25:44])
  • Cost to upgrade is “probably only about 150 to 200 a year.” – Jill ([25:54])

c. Life Insurance ([28:11]–[31:07])

• Term life insurance: Essential if you have dependents, a mortgage, or debts that would be passed on.
  • “Term coverage is so accessible and can be very inexpensive.” – Jill ([30:52])
  • “If my dad had life insurance, my mom would still be living in her home.” – Jen ([28:38])
• Make sure any work-provided policy is adequate; supplement if needed.

d. Disability Insurance ([31:53]–[34:36])

• Most overlooked protection: Your ability to earn income is your biggest asset.
  • “If you are young and healthy, disability is actually a greater risk than death.” – Jill ([32:07])
  • Suggested coverage covers 50–60% income, with a 90-day elimination period (bridged by your emergency fund).
  • Use a broker or platform like PolicyGenius to shop rates.
  • “If you can afford it, own OCC is going to be the best [coverage].” – Jen ([34:21])

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5. When To Work With a Professional ([34:36]–[37:44])

• Times to seek a Certified Financial Planner (CFP):
  • Considering refinancing, restructuring, or consolidating debt
  • High debt + high income (e.g., new doctors/lawyers)
  • Received a lump sum/inheritance (especially retirement accounts)
  • Facing a major life change: divorce, death, marriage, notable insurance or estate events
  • Confusion over complicated insurance products like umbrella, permanent life, indexed, universal, or whole life
  • “If that product is right for you, you already have a relationship with a financial advisor. I’m going to leave that there.” – Jen ([37:44])

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Memorable Quotes & Moments

• “Debt is not just a number, but it can be a financial weight. And paying it off does not look the same for everyone…” – Jen ([05:48])
• “Having these small wins psychologically primes us to believe we are capable of bigger things.” – Jen ([10:07])
• “Even if you have a health history, don’t be afraid… I have Ethos. Ethos approved me and my coverage is still less than $30 a month.” – Jen ([31:24])
• “Your ability to earn income is your biggest financial asset.” – Jill ([32:03])
• “If you are looking at any of this and being like…the debt was okay… you lost me at insurance, then it may be time to start working with a certified financial planner.” – Jen ([35:05])
• “If that product is right for you, you already have a relationship with a financial advisor.” – Jen ([37:44])

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Timestamps for Major Segments

| Segment | Timestamps | |---|---| | Series overview & resources | 01:50–04:39 | | Debt planning (math, psychology, emotion) | 05:04–13:28 | | Building emergency funds | 15:19–19:16 | | Emergency fund account strategy | 19:16–22:10 | | Health, auto, life, disability insurance | 22:10–34:36 | | When to call in a professional | 34:36–37:44 |

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Additional Resources

• Free DIY financial planning spreadsheet: frugalfriendspodcast.com/plan
• Finding a fiduciary CFP: frugalfriendspodcast.com/CFP
• Emergency fund tools: frugalfriendspodcast.com/cit, frugalfriendspodcast.com/platinum

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Tone and Takeaway

Jen and Jill balance expert financial insight with humor and empathy. They encourage self-reflection, caution against one-size-fits-all advice, and promote achievable progress over perfection. Their advice is approachable, actionable, and always delivered with a touch of heart.

Listen in next week for Part 3: Retirement Planning!

Transcript

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[Jen]

Start your free [e-mail] DIY financial plan part 2 debt and emergency planning. Welcome to the Frugal Friends podcast where you'll learn to save money, embrace simplicity and live a richer life.

[Jill]

Here are your hosts, Jen and Jill.

[Jen]

Welcome Frugal Friends. I'm Jen.

[Jill]

I'm Jill.

[Jen]

And welcome to part two of our four part series on diying your own financial plan.

[Jill]

There are so many goals that you can pursue and a lot of voices out there telling you what you should be pursuing. And it can be hard to know. What do I do first? Are there ones I can do simultaneously? To what extent should I pursue this goal? And we really want to clear through the clutter for you.

[Jen]

So a comprehensive financial plan is important no matter what stage you are in your finances. Whether you earn a little, a lot, mid tier, whether you have nothing invested, a lot invested, just a little bit. And so we have pursued becoming certified financial planners because we think it is so important to have resources out there who are actual Certified experts. But we also recognize that not everybody is in the place where they need to work with a certified financial planner. So our goal for this series is, is to help you make your financial plan and to identify the places where it might trigger you over the fence to where it is time to work with a professional certified financial planner.

[Jill]

So over four 30 minute episodes, a little bit shorter than what you might be used to, we are walking you through financial goals and budget planning. We did do that one already. If you've not seen it, go back and watch it. And then comes come revisit us again. Debt and emergency planning. It's what we're talking about today. Then we're going to go into retirement planning and finally money saving systems. So make sure you're subscribed to frugal friends on YouTube so that you don't miss anything, especially within this season.

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[Jen]

And if you are listening to this on Spotify or Apple or in the car, don't fret. We're going to go over a lot of things to include in your financial plan, but we've actually written them all down in a Google sheet and that you can make a copy of for free. And that [e-mail] plan we will send that to your inbox so you always have it. And if you identify anything while we're talking and you're like, okay, that signals that maybe it's probably better to work with a professional than, you know, do this and white knuckle it on my own. Or if you're just listening, you're like, actually, I don't want to do this on my own. I've changed my mind.

[Jill]

I need help.

[Jen]

You can head to frugalfriendspodcast.com CFP and that's where you are going to find the resource on how to work with a certified financial planner who has a fiduciary obligation to work in your best interest, not just the most commissionable interest for them.

[Jill]

Don't like that. All right, let's get into part two, which is your debt and savings plan plan. Again, if you have not gone through part one already, please do do that because you do need to have your current debt and savings from part one to be able to effectively move through what we have for you in part two. So let's talk about the elephant in the room. It's debt.

[Jen]

Debt. Yeah, we, we realized that after figuring out your financial goals, probably three, three out of three or two out of two or one out of one is going to be either paying off some kind of debt or saving for something. And so this episode is going to be dedicated to those things. And for most of our listeners, at least one of your goals is going to be paying off some kind of debt. And we know a thing or two about paying off debt. We sure do ourselves. My husband Travis and I paid off $78,000 of debt in two years.

[Jill]

We paid off $60,000 of debt in seven years. We took a much longer time, but we did it.

[Jen]

Yeah. Debt is not just a number, but it can be a financial weight. And paying it off does not look the same for everyone in the time you take or the amount you have, the amount you're comfortable living with. But you still need to make a plan for how you're going to pay it off. Because when you die, debt doesn't just go away most of the times, it's left for the people you love to deal with. So we need to make plans for our debt as soon as we get it. And so we are going to look at all three parts of what debt entails to figure out how it should fit into your, your financial plan. And those three parts are the psychological, the emotional, and the mathematical.

[Jill]

Yeah. So when it comes to the financial component, the math of debt, we want to recognize that higher interest debt is going to cost us more than lower interest debt. And so paying that off first is

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[Jill]

We also want to recognize that the stock market has returned around 7% accounting for inflation. This can influence, inform also the types of debt that we pay off. Can we earn more in the market than the debt than the interest that our debt is accruing? Those types of numbers can and I think should matter to us. Of course, there's psychological aspects to this that we're about to get into, but that's just, that's a factual mathematical component and that financial liquidity should not be ignored in pursuit of debt freedom. That's how you end up putting emergencies on credit cards. So we don't want to be so, so dead set on debt payoff that we have cleaned out our entire savings account.

[Jen]

Yeah, there's no need to take money out of your retirement accounts to pay off your debt. There's so many reasons not to do that. We're talking about retirement in our next episode, so definitely subscribe to be notified when that comes out. But yes, it is super important to recognize just the facts. These are the facts. And the, the, the weight that you give the mathematical component is up to you. So the math leads us to generally consider that credit card debt or any debt above. I would say me personally, I feel like a 10% APY. On the Internet you can find people that say 15% APY, which is the interest rate of the debt. Anything that or higher should be your first priority above any psychological or emotional components that may vary into the rest of your debt payoff. If you have credit card debt, that needs to be your number one priority to pay off before anything else, because you will be spinning your wheels trying to reach other goals, and that one debt in particular will just pull you back down every single time. Same with personal loans that might have like a 10% or 15% APY, so that that is a strong consideration that we give. But the next component to debt that weighs in and how you plan to pay it off is the psychological. So this is the way in which we pay it off. We know that small wins as quickly as possible have a big impact on whether you stick around long enough to achieve bigger wins, longer term wins. So there is this psychological component to what we call the debt snowball method, which is paying off your smallest debts quickest so that we can clean up our debts and have those quick wins psychologically. And so you're more likely to stick with your overarching financial goals if you believe you can achieve them. And having these small wins psychologically primes us to believe we are capable of bigger things. And we always, we want to, you know, go big or go home. That's something that we like, we say a lot in our culture, and it's actually detrimental into how much we can achieve long term. That's not how we want to focus. We want to focus on what's the quickest babiest win that I can get as quickly as possible to gauge whether I can do this or not.

[Jill]

There's also finally an emotional component to debt. Debt is not just numbers and math. There was a reason that we got into that debt in the first place. And now we have emotions attached to how we feel about that debt, whether it feels like a big regret for us or whether we're grateful for it. But it feels weighty and heavy. And so attaching all of those things to however we now perceive a debt payoff goal. Sometimes it feels like all I want is to be debt free. I am so weighed down and chained up by this debt, I just want it gone. And sometimes that feeling can be more important than the math. I think we see this with people who choose to pay off their house before they go into, you know, hardcore retirement investing or other things like that. And so both can be okay. We're not going to dismiss one over the other because it, it does have an emotional component. Sometimes for us, it's just better to get rid of it, even if it's a low interest rate, because we don't like how it feels. We don't like the attachment that we have to it. We want it gone. Fantastic. But we also need to recognize all the other components and create a plan that is not going to burn us out long term.

[Jen]

Yeah. So I would write down your debt and I would also write down, like, math, psychological, emotional, and under each of those I would write, how am I feeling about? And give each debt its own row and figure out, okay, is this credit card debt? Well, the mathematical, like this wins out. We gotta get this, you know, is this a car loan? Okay, so the math is whatever on this, you know, lower interest loan. But, like, how do I feel about it psychologically? Is it a. Wait for me? No. Or how do I, you know, is it a small loan? And psychologically I could pay it off fast and like, it would really give me momentum for my next ones.

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[Jen]

So maybe that is a priority. Or it's, you know, like a payday loan that you feel really guilty about. And like, well, that's probably going to be a higher interest, but, you know, theoretically, maybe a low interest, you know, payday loan, unicorn. Then it's just a psycholog, like an emotionally very weighty, negative feeling. Like, okay, maybe that's lower interest, but we're paying it off higher than the car because it is so weighty. So looking at each of your debts and kind of writing down how you feel about them and then sticking them into your financial plan based on those

[Jill]

results, how you're gonna pay off each one in sequence.

[Jen]

Yeah.

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[Jill]

50% less okay, next we need to talk about our emergency fund. This is an important thing to be having simultaneous to debt payoff again because we don't want to go into further debt because of an emergency. So we want to have at least a bare bones starter emergency. Some people might use $1,000 as a benchmark, others might use their health insurance deductible. Personally I like that one better as a benchmark of what is my starter emergency fund because that is a real emergency that you might find yourself in. And if $1,000 isn't going to cover your medical emergency, then guess what? Credit cards.

[Jen]

Yeah.

[Jill]

Start happening.

[Jen]

Definitely. So I would say at least one to $2,000 as a starter emergency fund and you can save beyond that in conjunction with whatever your debt payoff goals. If you if you want more. I think if you feel comfortable with a higher starter emergency fund, but you have this really high interest credit card debt. Something that I would recommend is okay, start with 1000. Just save $1000 really quickly before you pay off your debt and then save more in your emergency fund simultaneously as you're paying off that one debt and maybe make the time horizon the same for both or Whatever time horizon feels right for you. But we really do need to prioritize high interest debt, especially if you have a lower risk tolerance and you're like, I need $5,000 in my starter emergency fund or I don't feel safe and maybe you aren't higher income. There just needs to be some adjustments

[Jill]

based on that and we're finding this money from our cash flow. So this is where that first step, part one of our video series comes in handy, where we know what's coming in, what's going out, where do I need to make adjustments to free up some of that money for paying down debt and maybe putting money towards an emergency fund simultaneously. And again, our entire backlog of Frugal Friends episodes to help you with that. And then our next goal is going to be a full emergency fund. We recommend, and most recommend three to six months of bare bones exposure expenses. That would be your fixed expenses as well as some variable expenses. But we're not including all of our clothing and entertainment budget. We're talking what can we live off of if there were an event where we are out of work or have some sort of crisis happening where we are not bringing in what we are accustomed to and we've got this buffer to help us out for those three to six months. General rule of thumb, because one is double the amount of time than the other three would be recommended for a, a dual income household. So if you've got two people earning an income and, and a reasonable. We're not talking one person has a side hustle making 500amonth and then the other one's making all of the money. We're talking both are contributing relatively equally to the, the household's income, then three months is probably good. And that's assuming that you're not both in the same industry or at the exact same job. Because if there is job loss chances, maybe both of you are getting laid off. So keep in mind some of the volatility of the careers that you have. But dual income households generally are good with three months, six months for single income households. If you've got one partner working, one partner at home, or yeah, you, you,

[Jen]

you have that really high discrepancy between one income earner to the other. So that's. Yeah, yeah.

[Jill]

Or, or if you are both working but you're in the same industry, then, then you're in that six month bucket.

[Jen]

Yeah. So it's. Yeah, the, the way that we do emergency funds, just to recap is you, you start with that starter at least $1,000, maybe a little bit more. Then you jump to your high interest debt and then you jump to your full emergency fund, whether that is three or six months expenses. If it's six months for your situation, start with three and then after that you can incorporate finishing off that last three with any other time sensitive saving goals that you have. But everyone should prioritize having your emergency fund in an account that is liquid. So it is, you can able, you can pull it out at any time in an emergency, penalty free at penalty free without any market influence. So it's not invested. I know for some of us a six month emergency fund is going to be quite a lot of money and it might be a little painful to see that not invested and not earning money. But that's not the goal of an emergency fund. That's a retirement account. We're going to talk about that next episode. It needs to be very liquid, very safe, FDIC insured or ncua. So that's at a, a credit union or a bank. And it should be protected against inflation. And so you can do that by saving in a high yield savings account. So these are typically online banks and because they don't have brick and mortar locations, they can offer higher interest rates on their savings. One that we recommend time and time again is cit. So if you're starting to save, you can head to frugalfriends podcast.com cit and get their starter essentially. Essentially their starter high Yield savings account. If you have more than $5,000 or that's how much you want to start with your Emergency Fund, then frugalfriendspodcast.com Platinum, that is their account that has a little higher interest rate for higher amounts, namely emergency funds. But what a high yield savings account does is it is not just, oh, I'm making 4% on my money so I can withdraw that every month and go out to dinner. No, inflation is typically about 3%. And so if we are not looking at our emergency fund every year, then if it's not earning anything, the purchasing power actually goes down every year. And so you typically technically would need to add more to your emergency fund every year. But if you have it in a high yield savings account, that's technically a hedge against the inflation. And so you can be sure that the purchasing power of your emergency fund is preserved with that high yield.

[Jill]

Some additional emergency planning beyond just saving the three to six months of expenses is having insurance. So this is part of what we sort of were alluding to when we were talking in part one about being able to free up some cash flow, that there might be some things that we need to add into our budget that might not currently be there. It's insurance. So we're going to go through some of the most important insurances for us to have and the first is health insurance. So everyone needs to have health emergency coverage. We never know what's going to happen. Even if you're healthy, you hardly ever need to go to the doctor. You do need to have health insurance and hopefully that's provided to you through your work. But I know we've got a lot of people who are working at startups have their own businesses at just isn't an option. That is our situation. Hello, you've got a friend in us if that's where you're at or you just can't afford the insurances. And so it might be worth looking into a health care sharing plan. They are kind of that, that hedge against a health care emergency. It's not going to be great for people with chronic issues or who are at the doctor a ton, but it is a protection against those catastrophic kind of crisis situations and can provide some preventative maintenance and some virtual care type of things. I know you use Liberty. I use a thing called Zion. There's tons of healthcare options out there

[Jen]

and we've both used them. We've both had to use our healthcare sharing for emergency, ambulance, hospital stay, giving birth and it works. Can report at least Liberty is not a scam. So it's not right for everyone. But if you, you need to have something and it can be useful for you.

[Jill]

And within the past couple of years there has been an option created for those of us who are on healthcare sharing plans to still be able to qualify for an hsa. Where we then are able to, they're, they're able to perceive this healthcare sharing plan as a high deductible plan qualifying you to be who have an HSA and contribute to that hsa. We're going to talk more about that in Part four.

[Jen]

Part four and we love hsa, so please stick around for that if you want to save a ton of money on taxes every year.

[Jill]

But if you're interested in that, we're going to have all the links for that in the description as well.

[Jen]

Next is auto insurance. You know you need it unless you live in New Hampshire, live free or die even there. You should, you know, that's their, that's their so much. Yeah, yeah.

[Jill]

No, you pulled that one out.

[Jen]

I know it's a fantastic state but I still think you should have auto insurance if you live there. So you the only thing we'll say about that is that for liability coverage most people only have their state mandated minimums which sits usually around 25,000. But in the year of our Lord 2026 and will be 2027, the costs for serious car accidents have skyrocketed and it literally just scratches the surface and you could be liable for so much more. So experts typically recommend having at least $100,000 in that liability section. So you may, you may want to consider increasing liability, especially maybe for younger drivers in your household. But just take a look at your coverage and see how you want to work with that.

[Jill]

Yeah, it will cost you more money but probably only about 150 to 200 a year to add that increased coverage which you cannot self insure for that amount of money. You can't just be like well I'll just save it. Yeah, no not that much.

[Jen]

Absolutely worth it for me.

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[Jill]

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[Jen]

code podcast15next is one that I am super passionate about. I shared this story in the Friend Letter, which is our newsletter, and it resonated with so many people. But my mom lost her house after my dad died. She refinanced the mortgage in 2007. The bank went under in 2008 and she did not get billed for her mortgage for many years. And so she didn't pay it. And so then instead of, you know, investigating or saving, you know, she was just foreclosed on and didn't have any money to fight that foreclosure with. And so she lost the house. And I truly believe that when we lose someone we love, we don't want to put them at risk for predatory financial options. Which I'm not saying a cash out refinance, you know, right after your husband dies is predatory, but I'm not saying it's not. And potentially like not being able to pay the mortgage and losing the family home. And so I believe if my dad had life insurance that my mom would still be living in her home. And it wasn't as easy to get back in 2006. You couldn't get it online. It was very expensive. You had to go in for health checks, which he might not have even passed. And it's just so simple and so affordable to get term life insurance nowadays that it is something everybody needs to have. If you own a home or somebody relies on your income or you have debts that will be passed on to people after you die, it is essential.

[Jill]

And I know a lot of people will say, oh, I have life insurance through my work. Check it, be sure that you understand what sort of life insurance it is, what the payout is going to be, who the beneficiary is, what they'll receive. We say that life insurance should at least cover any debts, which would include a mortgage. So it should at least be the amount that your mortgage is. A lot of times the life insurance provided through work is 25,000, 50,000. That is not going to be enough. So it might be worth adding some supplemental coverage which like Jen said, term coverage is so accessible and can be very inexpensive. I think both Eric and I pay less than $20 for our plans. Granted. You know, we're, we're, when I got it we were a little bit younger. So it helps if you get it earlier and you get to choose whether you want it for 10, 15, 20, 30 years. We like Ladder and Ethos. We will link those in the description as well. Yeah, consider it.

[Jen]

And even if you have a health history, don't be afraid. I was denied from one life insurance company, but I have Ethos Ethos approved me and my coverage is still less than $30 a month. So it still can be affordable. Please. And if you're not sure how much you need, get that recommended amount now. You can always get a different policy down the line and let the other one lapse. But maybe you're not insurable later on and you are insurable now. You run that risk the longer you wait. So it's better to just lock in something now. You can always get something different in the future if you need to, but please lock in something now.

[Jill]

The final insurance that we are pleading with you to consider is disability. So this is probably the most underappreciated type of insurance need that we have. Your ability to earn income is your biggest financial asset. And if you are young and healthy, disability is actually a greater risk for you than death is. At this point I can't tell you how many people I know who have had experiences with crisis events, medical events in their lives that have required disability. And there's nothing, there's no safety net. Because I'm young and healthy, I never expected for this thing to happen. So we would encourage you to price out. What would some long term disability look like? Usually it's going to cover 50 to 60% of your current income. And so again, it's kind of looking at your bare bones budget to be able to cover you for two to five years. We recommend a 90 day elimination period, meaning that you'd only have to wait 90 days to begin receiving that disability, which guess what, you've got your three to six month emergency fund. So you're covered. That 90 day elimination period is fine for you. And a lot of times you're going to be Able to pay a little bit less because of, for the disability insurance because you've got that longer elimination period.

[Jen]

Yeah.

[Jill]

So yeah, if that's too expensive, some of the variables that you can look at to adjust how much the disability insurance is going to be monthly is look at potentially a longer elimination period, then you're going to want to increase your emergency fund for however much that elimination period is or a lower monthly payout that you might receive when disabled. And like we said, increase your emergency fund accordingly.

[Jen]

Yeah.

[Jill]

So some other terms that you want to look at when it comes to disability insurance is in what circumstances are they going to cover you? So they talk about any oxygen, own, oc, modified OC and it just means what type of work are you able to do? Are you able to do any job but just maybe not your own job? That's going to kind of be the worst type of coverage because you might be really in the weeds and not feeling great. But the insurance says, well, you've got Enioc and we think that you'd be able to go work this, this job that pays you $9 an hour. And so we're not going to pay you out because you're able to do that. So if you can afford it, own OCC is going to be the best. It means if you are not able to do your specific own occupation, they will cover you. It doesn't matter if you're able to do any other kind of occupation.

[Jen]

Yeah, that is the most expensive one and that's going to be more appropriate for doctors, lawyers, higher income people. There is a modified version that is probably appropriate for most people, but an insurance broker can help you with that. And when you are going to get insurance, make sure you're working with a broker that uses quotes from multiple different companies. Don't just go to an agent of a company. You'll be sure to get the best price when you go to that or something like PolicyGenius Online to get quotes from different disability insurance providers. And so if you are considering, if, if you are looking at any of this or hearing any of this and being like it's the debt was okay, the savings, but you lost me at insurance, then it may be time to start working with a certified financial planner. But again, these are all things that you can put in your plan and start to plan for on your own. Right. But when we get to some complex areas, it is a good time to start working and forming a relationship with a financial advisor. And so some of those triggers are in the debt category. You're considering refinancing, restructuring or consolidating debt as a strategy to pay it off. Maybe you have high debt and high income. So you are a recent graduate of medical school, law school, something like that. You have in the savings category, maybe you've just received a large lump sum from a sale or an inheritance. Inheriting retirement accounts is super important that you know everything about that. Those have limitations. You are definitely anytime you receive a lump sum, you're going to want to work with a financial planner.

[Jill]

Because it's not just about what do you do with the money, it's how do you even receive the money. Sometimes there can be rules around that to keep you out of penalty fee

[Jen]

land and tax land. Yeah. And so if you're dealing with debt and savings through major life transitions like we said earlier, divorce, death, marriage, you know, maybe childbirth, but maybe childbirth like later in life or remarriage or somebody is trying to sell you an insurance product that you are not sure is worth it, then it's time to see a certified financial planner. So if you're hearing words like umbrella or any type of permanent life, you, you know, indexed, universal, whole. Not all of these things are bad. They're villainized. They are good for a certain type of person and that certain type of person is definitely working with a financial Planner. A hundred percent.

[Jill]

That's a good way of saying it.

[Jen]

100%. If that product is right for you, you already have a relationship with a financial advisor. I'm going to leave that there. Yeah.

[Jill]

Okay.

[Jen]

Yeah.

[Jill]

We hope all of this is helpful. Again we have everything that we're talking about today in a Google sheet that can help you be creating your own starter financial plan. That'[e-mail] plan. Get that for free. Follow along with us in this four part series and if you again want to find someone reliable, reasonable rates, responsible with your individual circumstances and going to be a neutral third party to help you. If you've got some of these CFP trigger things happening that Jen just went through, we'd be happy to help guide you in finding the right resource. Frugalfriendspodcast.com CFP and we're going to see you in part three.

[Jen]

Frugal Friends is produced by Eric Sirianni.

[Kiana]

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