The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.
If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.
Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.
Next in the series is FMF reader KA. She answered my questions (in red below) as follows:
Please tell us a bit about yourself.
I am a 42 year old single woman who managed a group home until I was injured at work for a second time and am permanently disabled. I had to leave my job in April. I am not collecting social security disability, my legs might not work well, but my brain isn't broken. I have been living off workers compensation payments (70% of my previous income) and savings for the last year, my benefits will expire at the end of this month. (Jan)
I have sent out hundreds of resumes, but when it comes time for the interview, they see me hobbling in on my cane and I never get a call back. It doesn't help that I am also overweight. I did finally manage to find a seasonal job as a certified tax preparer which I am starting January 10.
I have also been doing some freelance writing, making jewelry, and selling things on Ebay to supplement my income. I am in the process of write a couple of e-books, and I just created a blog on frugal living that I am hoping will generate some ad revenue. I also have been going to classes, took my test, and just applied to get my license for selling life insurance. I have a Masters Degree in Project Management and a Bachelors Degree in History.
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
Current income is $1,500 a month, I have spent most of my savings, only have $1000 left. I have $7,000 in credit card debt, two student loans, one currently deferred for $64,000 and a private loan that I owe $3,200 - $52 a month I have a 6 year old car, I have 7 more payments on before its paid off, but 1/3 of my credit card debt has been spent trying to keep it on the road. Another 1/3 has gone to getting medical care as I no longer have health insurance. My living expenses are $550 rent $340 car pmt $87 car/renters insurance, $70 to $90 utilities, $100 phone/internet $300 credit card payments. My credit score was 715 until a medical bill ended up in collection. Thats pretty much my income - I have had to use what little extra I make on the side and my savings for groceries, laundry, and gas for my car which is about $220 a month if I am careful.
What are the current financial issues you're facing (saving, paying off debt, etc.)?
I'm about to hit desperation mode once my workers compensation is gone, and this seasonal job ends in April. I am doing everything I can to generate income, but I'm afraid it won't be enough.
What are your plans for the future (retire early, build your career, etc.)?
I would like to start my own business, I even have a unique idea, but because of my disability, I couldn't physically do it by myself, nor could I afford to pay someone to help me until things get off the ground. I don't even want to think about retirement
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
Up until the time I got hurt, I was always paying more than my minimum balance on my credit cards, kept my balances less than 50% of my credit limits, set money aside in my savings account every month, and was contributing to my pension plan and buying savings bonds with my income tax returns.
Nice hearing your story KA! You have done a good job of coping with your injury and making the best of your situation. I applaud you for your desire to continue working and to keep pushing forward even with this injury setback. Here is what I would recommend:
1. Even though you don’t want to live off the government, I think it would be wise to try and receive social security disability. After getting back on your feet, you may then decline to receive the benefits in the future. For now though, I think you could really use the safety net. There is no shame in using a program that you have paid into during your working career.
2. When looking at your budget, there isn't much room to cut. I would look for a cheap cell phone plan (there are still some available for $30 or less a month) and ditch the internet. Obviously it is a nice luxury, but you should be able to go to the library or get it for free at McDonald's when you really need it. I would also focus on paying off your car loan ASAP. Maybe contact the credit card company and make them aware you will pay them off, but for a while you might have to make less than minimum payments. The car payment and insurance is close to 25% of your income and that is tough to make work. After paying off the note, you should be eligible for a cheaper car insurance plan.
3. I would really focus in on your job as a certified tax preparer. Yes, I understand it is seasonal, but if you were to work diligently both on the job and in your personal studies, you could turn it into a full time income in the future. Look into becoming an Enrolled Agent. It is possible to make $40,000/year working only during tax season (or much more depending).
4. Without knowing more details on your student loans, it is hard to make a suggestion. But in your current financial state, you really can’t afford the minimum payments (hence one is deferred). Again, honesty and being upfront with the lender is always a better solution than to just quit paying and fall off the face of the earth. I would contact them to make them aware of the situation and to let them know you are doing everything you can to pay them back.
Thanks for sharing your story with us! Again, I’m very sorry to hear about your disability.
Oliver
Posted by: Oliver @ Christian Money Blog | January 19, 2013 at 10:49 AM
I agree with Oliver's first point - you should collect disability as long as you need it, that is why it is there.
Posted by: Julie | January 19, 2013 at 11:59 AM
From what I understand, Social Security Disability is the most stringent level of disability to attain, and can take a very long time to go through the process and receive. Since you are permanently disabled though, it sounds like it would be worth at least investigating. At least talk to a "specialist" in the area. I had a somewhat similar situation with a family member and did simple Google searches for specialists in this area. It turned out they weren't eligible, but we learned a lot about what it takes in case the situation got worse.
I'm assuming you didn't have disability insurance when the accident happened? A lot of policies now have different levels, so in the circumstance of yours, can work "white collar" but not your regular occupation, you can buy policies that include those circumstances.
One other suggestion: You have a Masters in Project management. If you have any interest in working in that field, there are a fair amount of remote work positions now, I do it myself and am almost 100% work from home. United Health Care has a fair amount of remote IT PM jobs, but there are certainly others. Perhaps you could find contract or perm work in that role, and limit the impact of your mobility issues?
Maybe look into individual health care policies? You may very well be stuck until Jan 2014 when the new health care policies come out that require insurance to accept "pre-existing" conditions such as yours. Unless you get a job with benefits of course.
Posted by: Tim Wells | January 19, 2013 at 01:37 PM
That's a tough situation, but it's good that you're not giving up and looking for help anywhere you can find it, like posting here.
If you're not already, you should look into income-based repayment options for your student loans. I don't think it was available when you would have finished school. When your deferment expires, it can keep you from defaulting.
I would look into health insurance options. An individual policy is expensive, but may be cheaper than 1/3 of your credit card.
Echoing other comments here, you MUST look into social security disability.
Have you considered teaching part-time at a university or community college? With your master's degree, you can teach bachelor level programs. To be honest, the pay is not that good, but it's much better than nothing, and more importantly, you can often do it online. Also you can choose only evening classes, so it doesn't interfere with a day job.
Once that car's paid off, you'll have some breathing room. I might reduce my credit card payments to accelerate paying off that car. You're robbing Peter to pay Paul, but it will increase your cash flow, and give allow to throw more money at that credit card.
An M.S. in project management is respected, but for many positions, a project management professional (PMP) certification is required. You can self study, there's no need to pay for an extensive class, especially with your degree. The test itself is pricey, but it can easily pay for itself.
Sometimes you need to not worry about retirement. It's unfortunate, but this is one of those times.
Good luck!
Posted by: Paul | January 20, 2013 at 11:37 AM
I met someone yesterday that teaches at a city Senior Center. She makes $50 a class. It isn't much but it might help.
Posted by: Pam | January 21, 2013 at 11:49 AM
First let me applaud your budgeting skills...I've seen quite a few people on this site talk about their frugality and have expenses several times yours.
Let me echo the other folks suggesting apply for SS Disability. I believe your student loan can be discharged under very similar criteria.
Consider buying an individual plan HMO. Something like Kaiser may have a lot of "total wellness" programs that you might really benefit from.
Consider utilizing public transit or disable transit services. If that works out for you then selling your car would make life easier.
Depending on the laws in your state it may be appropriate to stop making payments on your unsecured debt (private student loan, credit card, medical bills). This would be saying goodbye to credit and they may be willing to negotiate sooner given your situation.
If you cant find work but can get some technical volunteer work (probably tax related) consider that to keep your resume from going fallow. Be sure to add in your e-books once they are published and the blog.
You might be able to get cheaper insurance. Go for the state minimum on liability as your assets are minimal.
Best wishes,
Adam
Posted by: Adam | January 21, 2013 at 12:03 PM
I think you're doing the best you can in a rough situation and that's something to be proud of!
In terms of finding a new job - have you tried going through an agency? Do you know anyone who could recommend a reputable recruiter or headhunter? That might help open some doors. Also, if you truly feel that your physical disability is causing people to reject you right away (which is so unfair and I'm sorry that is happening) - could you try doing a skype or phone interview first? Perhaps that would allow potential employers to "fall in love" and then the handicap would not seem as much of a barrier. It's not fair you'd have to do that, but it might help. Also, I've worked with many candidates who have had to leave previous jobs becuase of a medical leave/situation, and I always encourage them to really talk up how much they are looking forward to getting back to work.
Do you have a LinkedIn profile? If not, I would suggest getting one and asking every professional contact you have to write a recommendation.
Good luck!
Posted by: Walden | January 21, 2013 at 04:39 PM
"I would like to start my own business, I even have a unique idea, but because of my disability, I couldn't physically do it by myself, nor could I afford to pay someone to help me until things get off the ground"
Could you offer your "assistant" a percentage of profits as compensation?
Posted by: April | January 23, 2013 at 11:33 PM
I want to thank you all for the feedback, and I took many of your suggestions under consideration. I took my tax return and paid 3 payments on my car, I only have 2 more payments. I also had an opportunity come up, the man I work for is also opening an insurance office, and the gentleman who is helping him set up his office noticed my organizational abilities and asked me if when I was done doing taxes, if I would come work for him. :)
Posted by: KA | February 04, 2013 at 11:41 AM