Financial Options – Prepared or NOT? (Part 4)

By Wendy Olson-Brodeur, CFP, CFDS, CSC, Mediator

Who wakes up in the morning and says “Oh today I think I’ll get diagnosed with cancer” or for that matter, have a stroke, or heart attack or whatever. Of course we do not. We might even be predisposed to it and still think, it will never happen to “ME”.

The problem is when it happens to be “our day”, what we do say is “Damn…nothing has prepared me for this BUT why didn’t I make the time to prepare myself and family for the financial stress that is about to hit.”

Financially any illness can be devastating. We do not know how long our situation will last. What will health care or insurance cover? Will my employer pay my income? And for how long? Will my spouse be okay? What about my children? Will I lose my house?

The reality is, this does NOT have to happen to you. The difference in taking a bit of time monthly and planning annually can really be the difference. The choice is yours. And it is never too late.

No Plan

Here’s the difference. People who do little planning may face some or all of the following.

  1. No money to bridge the gap between illness and group benefits.
  2. Resort to using debt to pay the bills.
  3. Having to borrow money from friends or family.
  4. Not being able to pay minimums on credit cards and ruining your credit rating.
  5. Canceling insurance policies because you can’t afford them when you need them the most.
  6. Thinking the bank will be there for you.
  7. Cashing in some or all of your retirement funds.
  8. Having the bank foreclose on your home.
  9. Going bankrupt.
  10. Being presented with a Separation or Divorce.
  11. Closing your Business. Selling your Business for much less than it is worth.
  12. Losing your Business.
  13. Becoming homeless.
  14. The stress of money making your illness ever worse.

Really, it doesn’t have to be this way. We need to teach each other and we need to teach our children. Like I said it’s never too late!

Know one thing. The big money institutions job is to make money for their shareholders not to bail you out when you have not planned or when you are in a crisis. You need to manage the reality. Actually it is often our loved ones left holding the bag, as we are the ill ones and they are prepared to do whatever it takes.

I know this first hand from family and friends. Some paid no attention with the attitude that “nothing will happen to me”. The money stress can add up. You can apply for CPP Disability and other programs but the process itself can be humiliating.

Trust me; there will also be a few cases where all the planning in the world would never change the situation. To that I say be grateful for volunteers, community, church and charity.

And never take no for an answer. Sometimes we don’t know what we don’t know. And that includes professionals we think should know and be there to help us.

I remember getting a referral to help a lady. The bank told her foreclosure was looming and that there was nothing they could do.  Learn to think outside the box. We were able to find someone to re- write her debt as a line of credit, freeing up some much needed cash flow. It allowed her to stay in her home as she fought her fight. Once she recovered she was able to get back to work and continue. I cannot image where she might have landed if no one had taken the time. Her stress level went from out of sight to a level focused purely on her recovery battle. Never say never!

What I can say is we could lessen the statistics of financial stress if we just educated more people on what to do. Let’s start with our children. Let’s start today.

Planned & Prepared

Those who did more planning, although the situation of illness and death are no fun for anyone, the journey was at least less stressful because the money part was not an issue. There was money to pay the bills, allows the spouse to quit working and care for their loved one, money to buy a few of the items not covered by plans.

People who do take time to work with someone and create a balanced plan include some if not all of the following.

Balanced Plan Includes:

  1. Dealing with the emotional reality that things may need to change.
  2. Understanding your personality around money and why you do what you do.
  3. Getting professional help if needed.
  4. Hiring a Certified Financial Planner who is there to coach you along.
  5. Having a Cash Flow Consciousness Plan – an awareness outlining your needs, goals and wants. What is the difference?
  6. Being aware if you are living within your means? Or is it more keeping up with the neighbour syndrome?
  7. Having an Emergency fund – where a monthly amount is automatically put away. Start with 5-10% of net pay if possible. It’s only a matter of time when this will be needed….like when you are diagnosed.
  8. Having debt controlled. Many of us have a mortgage. Too often I see people focus on paying extra. That is all fine if the rest of your plan is balanced. What the problem becomes is when you really need the funds; the bank may not want to extend credit to you. As long as you are not a spender, set up a line of credit for emergency situations.
  9. Protecting your income with proper insurance. Understand the definitions. The difference between “own occupation”, “regular occupation” “any occupation” can be a huge difference when you are expected to return to work. You get what you pay for. The cheapest is not always the way to go. Do you need disability, a top up to your group plan, critical illness or long term care coverage? There is not a right or wrong solution. Every one’s situation is different. Get help going through this. What do you really need rather than just buying something that makes no sense? It needs to fit into the overall plan.
  10. Who will make your mortgage payment? Have you considered insurance? I don’t mean bank mortgage insurance. I mean independent, goes with you, kind of insurance. The difference is underwritten.
  11. The sooner you start to invest for you and your family’s future, the easier it is. It is about time in the market not timing the market. Invest in well-known blue chip companies when you start. If it sounds too good to be true it probably should be avoided.
  12. Think about the “what ifs” and do not be naive to think life will not hit you over the head.
  13. Make sure you have an Enduring Power of Attorney. Don’t think the government will make the best choices for you. Why take that chance?
  14. Getting a Will in place. People will say it’s too expensive. Well it will be much more expensive if you do not have one in place.

Bottom line, your situation is what it is when you get diagnosed, but your financial situation may be changed or rearranged to suit your situation. Financial planning is not a right or wrong set of strategies. Sometimes we need to think outside the box. Work with someone with experience and knowledge to help you through and then make sure a plan is in place for your future and your family.

About the Author:

Wendy’s mission is to Educate Enrich and Empower the people she serves!As a Certified Financial Planner (CFP) she is trained and educated on all aspects of money. She also specialises in Financial Divorce (CFDS), sometimes a reality for many. To learn more about Wendy and her work, visit – www.wealthwellness.ca and www.tfds.ca.

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