Music Mondays - Everybody Hurts
Everybody Hurts...
Two weeks ago I received this text from a client of mine:
“I’ve been meaning to tell you THANK YOU for being my financial coach. Back in June, I found out I had a detached retina in my right eye and I’ve gone through a series of surgeries to fix it, and I was out of work for two full months. I had to go on short-term disability and I’ve paid of thousands in medical bills with more to come. Without your financial advice, I wouldn’t have been able to stay afloat. You really saved me, and I am so thankful for you!”
For the record, this is the type of text that I love and hate to receive from my clients. I love to hear that their focus on financial fitness allowed them to weather a financial storm, but I hate to hear that they had to face one to begin with. The reality, though, is that everybody hurts, sometimes. From my experience, financial storms are not surprises; the only surprise is what type of storm it is.
Sometimes...
I have talked about Gretchen on the blog before. When we started working together she had $700 in her bank account and thousands in consumer and student loan debts. Together we worked on a plan to build her assets so that she would have the cushion and security to weather a financial storm. I know it’s difficult to plan and prepare for the unknown, but it’s important to remember that the unknown is lurking out there and no one is immune to it.Gretchen had no idea that she would have this obscure retina issue two years ago when we started working together, so it made her planning a challenge, but I guarantee you that now she will always be prepared in the future.
What Happened to Gretchen?
She woke up with a headache in her right eye one morning and was seeing shadows. She shook it off for a few days, but when it wouldn’t go away, she finally saw the doctor. It turned out that she had a badly torn retina and has needed over 8 laser surgeries to correct this problem.Because of the surgeries, she couldn’t work and needed to go on short-term disability for two months. Short-term disability is not available for all employees; however, if it is, typically you will be paid 100% of your base salary for a short period of time, usually two weeks, and after that, you receive a percentage of your income up to a maximum of 180 days depending on the company.In Gretchen’s situation, instead of receiving the $6,000 in income she normally plans to collect over two months, she received $4,779. Not only did she make less, but also her expenses obviously skyrocketed. Between surgeries, exams, equipment, prescriptions, etc. Gretchen has paid over $3,800 in medical bills, and she not only still has more bills to pay, but there is also a 50/50 chance that this could happen to her other eye.I hate that this happened to Gretchen, but I am so thankful that she has made her financial health a priority over the past two years as this has allowed her to manage this latest emergency without creating financial problems on top of her physical problems. I know that Gretchen didn’t want to use her savings for something like this, but thankfully it was there to protect her.
Lessons Learned from Gretchen
1. Everybody Hurts
I know Gretchen’s example might seem extreme, but I guarantee you, $1,000+ financial storms happen all the time, it’s just a matter of the type. Gretchen experienced a health emergency, but I’ve seen clients experience car troubles, job loss, surprise moving costs, surprise legal expenses, and unexpected family emergencies that require travel. You truly never know what will happen; however, you should plan for the fact that you will face a financial storm at some point.
2. It’s Important to Have Emergency Savings
When I start working with clients, my number one priority is to make sure that they have a healthy emergency savings built, and it’s for situations like this. I want my clients to achieve all of their life goals and the best way to achieve your life goals is to not get sidetracked by life’s emergencies. A healthy emergency savings account will prevent you from getting sidetracked from your life goals.
3. The Value of Health Insurance
Gretchen has poor health insurance coverage, but at least she has it. We can’t always control the type of coverage we get, but I guarantee you that any coverage is better than no coverage. She has paid over $3,800 in medical bills thus far; however, without insurance, this amount would be well over $7,000 by this point.
4. Manage Medical Debt Responsibly
When you have a medical emergency, medical debt can quickly balloon out of control and become an overwhelming burden. Remember that you have the right to work with the healthcare providers to find the best repayment solution. Most of them will allow you to enter into a repayment plan, and the good news about the repayment plan is that it turns your medical bill into an interest free loan while you repay it.You should also remember when you go through a medical emergency to monitor all of the bills and make sure some payment is going to the healthcare provider. Medical bills in collections are unfortunately too common and can destroy your credit score for the next 7 years. As long as your healthcare provider keeps your bills current, your credit score will not be impacted.