Dave Ramsey says: Skip buying into mortgage disability insurance

Dear Dave,

If someone is following your plan, is it a good idea to get mortgage disability insurance during Baby Step 2?

— Craig

Dear Craig,

No, it is not. Mortgage disability insurance is a gimmick, and I would never recommend it to anyone.

I think I know where you’re going with this. During Baby Step 1, I encourage people to save up and set aside a beginner emergency fund of $1,000.

Baby Step 2 is where you start paying off all your debts, except for your home, using the debt snowball system.

A thousand dollars may not seem like a lot in savings during that time, but in the beginning it’s an attainable amount to save. Plus, it’s more than a lot of people have when they make the decision to get out of debt and gain control of their finances.

Then, after finishing Baby Step 2 you move directly in Baby Step 3 — fully-funding your emergency fund with three to six months of expenses.

What I would recommend is having long-term disability insurance in place. It’s fairly inexpensive, especially if you get it through your employer.

— Dave

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