Posts Tagged long-term disability

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I was driving to the store with my son the other day, when I narrowly missed a large tree branch that was lying in the street.  “I hope nobody was under that widow maker when it fell”, I said.  My son asked “why do they call it a widow maker?”  I explained that when you go camping,  you shouldn’t make camp under a large, dead branch, the reason being that if it breaks off, you’re squished, leaving your wife a widow.  Hence, the name.  A widow  maker is an accident waiting to happen, because someone neglected to perform the proper maintenance.

This got me thinking about all of the catastrophic events that may befall us financially.  While they may not kill us, they can put a real hurt on our financial futures.  Let’s take a look at some of these potential devastators, and the things we can do to lessen their occurrence:

Job loss - this is a killer if, like most people, you rely on your job for your primary income.  If you’re working in an industry that’s ripe for layoffs, like the defense industry, this might be a good time to be proactive.  Read this post about how not to get laid off.  If you’re lacking in job skills, take a few classes to get you up to speed.  Try turning that hobby into a second income.  Start a blog, or set up some websites with affiliate links.  As a last resort, pass on that vacation.  You can use the payout if and when you do get laid off.  These steps could add some income to help stretch your unemployment benefits until you find another job.

Illness - this one is hard to predict.  Even if you take reasonably good care of yourself, you could still be afflicted with a disease like cancer, or be involved in a car accident that prevents you from working.  In this case, the best defense is a good offense.  I’m talking about long-term disability insurance.  Many of you may balk at the cost.  My answer to that is, if you had a machine that printed money, would you insure it against damage?  YOU are that money making machine.  Make sure that those dollars keep coming in, even if you can’t work for an extended period.  I have coverage available through my job.

Divorce - we’re supposed to marry for better or for worse, yadda yadda yadda, but sometimes things just don’t work out.  In matters of love, fools rush in where angels fear to tread.  I know that Mel Gibson’s no angel, and his wife will get half of what he owns.  We’re all on a smaller scale, but losing half of your net worth would be devastating.  Choose your mate wisely.  Think compatibility, and find someone who shares your financial values.  Maybe a prenup isn’t out of the question either.  It may save you some aggravation in the long run.

Stock Market Crash - have you looked at your 401(k) balance lately?  Me neither.  I lack the courage.  Seriously, many of us never saw this coming, and our retirements have been moved to the right in many cases.  If you’re young enough, you still have time to recover.  But be smart. Don’t fall into the trap of many 50-somethings, who had most of their portfolio in stocks.  Do some reading, and diversify your investments as you get older.  The thing that will disappear as you get older is time.  Take advantage of it now.  Don’t rely solely on mutual funds and stocks.

Housing Bubble - I hope you’re not one of those people who are underwater on your mortgage.  The subprime mess hurt those with good credit as well, as home values plummeted.  If you can’t reasonably afford to make all of the payments associated with a house, wait until you can.  There’s nothing wrong with renting.  In fact, if you plan on moving in a few years, it makes more sense than tying up all of your capital in a house.  Walking away from a mortgage will trash your credit rating.

Did I leave any out?  Let me know in the comments.

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