An injury is something that someone never wants to suffer. Unfortunately, personal injury is a reality that thousands of Americans face every day. Whether it be slipping or falling at work, getting injured on the job, or a car accident, danger is everywhere and it’s not always your fault when you get hurt. These kinds of debilitating injuries can begin to get expensive as well. Paying for lawyers, seeing specialists, and being out of work are just a few things that can take a financial toll. That being said, we decided to team with some local financial advisors to learn about their advice on how to plan financially for a personal injury. Here’s what they had to say.
You did not plan to be injured so you probably don’t have a recovery plan. Your finances took a hit along with your body. Whether you managed your finances closely in the past, now is a good time to do so since tracking your expenses is one of the best ways to manage them. Assess your short and long term needs for necessary expenses first so that you can evaluate your current financial condition. Before you count on monetary compensation, see how long you can manage without it. We recommend that clients retain enough cash to cover the gap before Short or Long-Term Disability Insurance income kicks in.
If you have a HELOC Home Equity Line of Credit), that can be a resource to bridge expenses if your savings are not covering necessary expenses or you don’t have any Disability Insurance. You may need or determine that a different housing situation is necessary. Sometimes a mortgage lender or landlord will work with you once they know the situation but don’t skip payments without communicating with them. Similarly, many utility companies offer extended payment plans. Family or close friend loans may be an option for some but it’s important to have clearly defined terms in writing to protect all concerned and avoid misunderstandings. Your personal injury attorney should be able to help you draft the loan document, that could include repayment upon settlement agreements for all willing to extend your loans. Once you understand where you are, you can engage the services of a fee-only financial planner who can look at your situation, and create short and long-term financial scenarios for you.
Being injured can keep you out of work for a while or even cause you to lose your job. You might have unexpected expenses – medical deductibles, changes to your home to help you get around or rest comfortably, paying a caregiver. The best time to plan for a negative event like an injury is before it happens. If you have savings that are worth three to six months of your basic living expenses, that can help you survive the financial fallout from a major injury. Sometimes life gets in the way of building up your savings enough to cover an emergency.
There are still ways to stretch your dollars while you’re recuperating and waiting for insurance and other reimbursements.
- Cut down on discretionary spending. This can include eating at home more, instead of eating out. Use up the canned and other non-perishable food you have accumulated.
- Cut back on entertainment packages with your cable or satellite service.
- If you have student loans, contact your loan servicing company to see about getting a six-month payment deferral.
- It’s important to keep your home and car payments current so that you don’t get evicted or lose your vehicle.
If you’re having trouble with those payments, call the lenders – don’t wait for them to call you. As a last resort, you can put some of your basic expenses on credit cards and pay only the minimum payments for a while. But this really is a worst case scenario. If you’re working with attorneys to get payment because of your injuries, make sure you touch base with your attorneys every week or so to see if they need information from you, and always respond to them quickly if they contact you. Be realistic about what your case might pay you. And if you do receive payment, be aware that those funds are for medical bills and keeping your lifestyle at the level you had before your injury, not increasing what you spend. Entirely too many people are worse off financially after getting a lump sum payment than before receiving it because they don’t manage it wisely. It’s up to you to see that doesn’t happen to you.