What term level should I buy?

Dear Dave,
My husband and I are both 37 years old, and we have two children, ages six and four. We follow your plan and we'll be debt-free, except for our house, by next May. How should we determine whether to get 20-year or 30-year level term life insurance plans?
Valerie

Dear Valerie,
Based on your current situation, I think a 20-year policy would work out fine. However, if you're planning on having more kids, you might want to look into a 30-year plan. Let's take a closer look at your situation.

Twenty years from now, your kids will be 26 years old and 24 years old. Hypothetically, they both should have finished college by that time and be grown and living on their own. If you continue to follow my plan, you should also have paid off your home and be completely debt-free, and you will have been saving 15 percent of your income per year over those twenty years. That alone, on average, will give you more than a half-million dollars for retirement.

Do you see where I'm going? Eventually, you become self-insured by getting out of debt, staying out of debt, and piling up cash. It's that simple! So, if you've got $500,000 or more in your retirement fund, no debt, and your children are grown and out of the house, even if you or your husband were to die at that point, the other would still be in great shape financially!
-Dave

When do I close the cards?

Dear Dave,
Do you recommend paying off credit card balances before or after you close the accounts?
Anonymous

Dear Anonymous,
Either way is fine. The point is to get rid of them, and stop using the stupid things! I like the idea and the finality of going ahead and closing the accounts, but doing that will sometimes spur credit card companies to do dumb, unfair things-like jack up the interest rates.

You're on the right track, though. Personal finance is 80 percent behavior, and getting credit cards and credit card debt out of your life is a great first step in learning to behave with your money. You don't build wealth or save money by using credit cards, and you're naïve if you think you're going to play around with a multi-billion-dollar industry and beat them at their own game. The only way to win against credit card companies is by refusing to play!
-Dave

Dave's start in financial counseling

Dear Dave,
In the beginning, how did you go about establishing yourself as a financial counselor that people could trust? Did you initially offer free counseling to help build a reputation?
Anonymous

Dear Anonymous,
I never worried about whether or not people could trust me. I think knowledge helped offset reputation (or lack of one, back then), and I knew in my heart that I was an honest guy who had the ability to help people with their money.

I began doing financial counseling free of charge as a ministry at my church, but I have a degree in finance, and I had bought and sold more than 1,000 foreclosures at that point. That taught me a lot about the business and the bankruptcy side of things. And experiencing them for myself when I went broke gave me a unique perspective into what happens in those situations.

But it's probably safe to say that people trust me more now than when I first started. There definitely wasn't a line of people backed up around the block to see me in those days!
-Dave

* For more financial help, please visit daveramsey.com.