Prairie Chicken: “When I see $34 a month, I see $34 a month! It’s not $408 a year, not $2040, not $1 million, not $6 million! It is $34! It is $34, exactly that and nothing more!”
Eagle: “Now that I see things with an eagle perspective, I see every multiple of $34 a month that could have gone into an investment stream throughout my working life as costing me from 1 million to 6 million dollars. already if I think of the cost of each $34 a month as being, not 1 million to 6 million, but “just” 1 million dollars, a staggering move of wealth takes place over my whole life. When I write a check for $34 a month throughout my adult life, “only” $1 million disappears from my financial future. A check for $68 a month (2 X $34) vaporizes $2 million from my future destiny. A check for $102 (3 X $34) a month annihilates $3 million. When I write a check for $340 (10 X $34) in a month, I see $10 million in my mind being burned up in a huge bonfire off in the future.”
Prairie Chicken: “When I write a check for $340, I can’t see anything because of the tears! And I can’t see how $34 is $1 million and I can’t see how $340 can be $10 million! $34 is $34 and $340 is $340! You’re the kind of person who gets everybody’s shorts up in an uproar with all kinds of “seize your destiny” foolishness. It’s better to just “pay the man” and forget it. Go out and buy some lottery tickets and hope for the best. What kind of imbecile would believe that $34 a month could make a $1 million difference? And you are not already thinking about what would happen if you had more than one claim. You could have several claims during that 5 years that you say would cost $2040.”
Eagle: “OK, let’s look at that. I pay $2040 over the 5 years to get a deductible that is $250 lower. You are right to say that there could be more than one claim during these 5 years. How many claims would I have to file in 5 years to get my money’s worth out of this? Divide $2040 by $250 and you get over 8. I would have to file 8 claims in 5 years to get my money’s worth out of this. What would happen if I filed 8 claims in 5 years? Long before I already got close to 8 claims, my insurance would be cancelled! I would then be in a high risk, high-priced premium pool. It is impossible then to get my money’s worth by paying $408 a year for $250 of possible value.”
Prairie Chicken: “I’m glad everybody isn’t as stupid as you are. If you file a claim, how would you come up with the additional $250 for the deductible?”
Eagle: “I would be saving $408 a year on my auto insurance. This money would go into a pool, so to speak, my own Emergency Fund. I would have to be disciplined enough to save the money and not blow it since I would have more money to use each month. The pool grows over time. When something goes wrong, I pay for it myself. The money that is not spent on things that go wrong is invested and grows over the decades and this would not apply just to paying more money for a lower deductible.
I would not take towing coverage on my auto policy and I would not take death, dismemberment, and loss of sight coverage on my auto insurance. I would not carry medical insurance on my auto policy. The hospitalization insurance that I carry is in force whether I’m in a car or not. Special coverage tacked on to an auto policy is unnecessary. I would not carry coverage on audio equipment or complete coverage on older vehicles with low book value.
I would become my own insurance company FOR THE LOWER END OF MY LOSS. In other words, I would buy coverage for the higher end of my loss, but I would cover the lower end of my loss myself with my own money. The money I saved by not taking this coverage would go into my pool, my Emergency Fund. I would pay for the things that go wrong out of it. I would invest what was left. Over the decades, I would become more and more self-insured.”