Music Mondays – Everybody Hurts

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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.

Have you suffered a financial storm that attacked your emergency savings? What was the most expensive financial storm you had to face?

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Shannon is a financial planner who left a “traditional” financial services firm to start her own company, The Financial Gym, because she felt traditional financial services firms did not have the tools or resources to help people in their 20s and 30s who are starting out and trying to build assets while also managing debt. She realized that the key to long-term personal financial success is a commitment to financial fitness and making smart financial choices. Through her blog, Financially Blonde, her book, Train Your Way To Financial Fitness, her podcast, Martinis and Your Money and The Financial Gym, Shannon is committed to making financial fitness fun, easy and accessible for everyone.

18 COMMENTS

  1. I know some friends who I’ve talked to about an emergency fund who think I’m miss. doom and gloom. Ugh! People! Wake Up! This is life and shit happens. Better to have one less thing to worry about when it does. That vacation you’re taking right now? Won’t be remembered as being that fun when you have to pay for a huge car repair or medical bill. Yes, I’ve definitely have my fair share of poop-storms! 🙂

    • I know! My clients think I am the doom and gloom queen but it’s only because I don’t want to see their futures gloomier if they’re not prepared. I have not only experienced this personally, but I see it all the time with my clients.

  2. I think we’re on the same wavelength today, Shannon! I’m talking about dealing with failure on my blog today. All of your points are great. Especially the emergency savings point — for young professional women it’s often put off because we’re just getting started in our careers. Great advice. (P.s. I really like the changes on your blog! Not sure if it’s just for this post, but the font seems different and the listical format is also really helpful).

    • Yes, it’s hard to focus on the emergency savings when you are starting out because there are so many competing things to spend your money on, but stories like this make it important. I have been making a number of changes behind the scenes to the blog so thank you for the feedback!

  3. I am so paranoid about a medical emergency just draining my savings. I don’t currently have any health insurance, but even with the subsidies, I’d still have like a $5,000 deductible and it would cost me between 3-4 grand a year. Medical expenses are intense even if you’re completely healthy. It’s insane.

  4. Having enough money on hand to cover my out of pocket max and lost income for a while is a huge stress reliever to me. Money can’t replace having good friends and close family who would be willing to help out in a heartbeat, but it’s so important to be able to keep afloat after an emergency too.

  5. We’re constantly assaulted with new medical expenses. Or house expenses. Or… just name it. So we’ve learned how to weather the various storms. And I’ve learned to freak out a little less when we have to take money out of savings. It’s a process.

    But yeah, the point is that we have savings. We aren’t having to put everything on the card. Or rather, since we do put it on the card to get rewards, we can pay the balance in full each month.

    And now I’ve got the mournful Everybody Hurts song in my head. Darn you!

  6. Feels good when you can help point someone in the right direction. Life happens and you need to be prepared for it. Whether you self insure or have insurance, always plan for the unexpected. I’m thankful for our health coverage.

  7. I’m so glad she had the emergency funds to handle her situation. What a huge blessing. Your advice may have changed the entire outcome of her life – or even saved her from bankruptcy!

  8. My wife and I maxed out our health insurance three straight years due to surgeries related to medical conditions that were unavoidable. I can’t stand it when people say “I’m healthy so we don’t really need to save money for medical expenses.” You kidding me? You think you are immune to unexpected medical costs? It’s a ridiculous mindset and something people need to shake. Millennials are by far the worst when it comes to this mindset.

  9. Congrats on a job well done! It feels great that although I haven’t faced a great financial challenge, I have somehow learned how to face this kind of challenge. Now that I have emergency funds I feel confident that I would be successful in times when I am faced with this situation.

  10. Glad she has you to help her plan ahead! I had a co-worker who slipped, fell, and broke her foot on January 7th. Our company had just changed from a co-pay model to a deductible model health insurance. So she hit her 1500 individual deductible 7 days into the year! She was telling me how she was crippled by it. Now, her and her husband would both drive to the same job that was 30 miles away in separate cars, so I’m sure they could have planned ahead a little easier if they made some effort, but man, the peace of mind that an emergency fund gives you is invaluable!

  11. While it is unfortunate that she had to go through that she was fortunate that she worked with you and was prepared for such a catastrophe. That’s why the work that you do is so important! Short term disability is something that most people don’t think about. I need to learn more about how that all works…were the short term disability benefits from work, the government or private insurance that she purchased?

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