conversation: User (anonymous412): "I have been given two life insurance policies totaling about 100k in coverage. Their cash value is roughly 3500, split into 2000 and 1500 respectively. My wife and I disagree on what is the best course of action, hence the reason I am asking you guys.\n\nI've got several things going on : \n\n1. I have no credit card debt\n2. My cars are paid off\n3. I owe the IRS 4000 dollars (on a payment plan)\n4. I owe a hospital 2000 dollars \n5. I have an emergency account with 1 month's expenses in it at Ally Bank gathering about 1% interest\n6. I have a large student loan burden\n6. My wife really wants a vacation, we've never been on one and we are going to try for a kid soon. My work might pay for some of it because I can technically work there and get some face time with coworkers.\n\nMy priorities right now are to :\n\n1. Build out my emergency fund\n2. Pay off my remaining short-term debt (student loans will take awhile)\n3. Go on this vacation before it's too late\n4. Increase my life insurance coverage (I found a policy with more coverage than 100k that would cost roughly the same amount)\n\nI am debating on doing the following :\n\n1. Keeping the life insurance policies, they could theoretically be cashed out in an emergency\n2. Cash out the policies, put some in the emergency fund and use the rest for vacation, buy the alternative life insurance policy\n3. Cash out the policies, put all of it in emergency savings, buy the alternative life insurance policy\n\nMy wife really wants #2, I am not so sure.\n\nThe vacation I speak of would probably cost between 500 and 1500 depending on how much my work covers and if we can stay with friends.\n\nPart of me would also like to pay off the hospital bill, but I get bonuses throughout the year in my role. Generally speaking I think I'd be able to pay that off by September. \n\nThe IRS bill is more problematic, since a payment plan can only be taken once every 5 years. Part of me wants to take advantage of it for at least a year. I am on track for it to be paid off in that time frame."
  Self: "Term life insurance for the next 20 years or so shouldn't be very expensive. I guess I would *first* look around for a good term life insurance, close that deal, and *then* cash out the policies you have currently. \n\nI would not go on holiday as you are deep in debt as it is already. Put the money towards the most urgent debt (probably the one with the highest interest rate) and congratulate yourself for growing wiser."
  