One makes plans, life simply laughs at us.unknown.
I wanted to start my post today with this quote because more than ever quote speaks volumes to me. We all read and discuss how important setting goals, being determined, frugal, and resilient is. We make plans and along with that, we create expectations of success and certainly we hope to reach our goals within the time frame we have estimated.
Unfortunately, more often than not, things do not exactly go as we planned. Life likes throwing curve balls at you. You plan to go from A to B, but somehow the whole alphabet happens in between those two and you may end up in a totally different place from what you planned; sometimes for good, sometimes for worse, or sometimes you may find yourself right back at where you started but with different priorities. Life is just simply full of unexpected surprises and unknowns.
This can lead to frustration and disappointment, making you give up your goals or even your desire to plan anything. “What for?” You may ask, if anything ends up going sideways. Unless, of course, you understand that these frustrations and disappointments are just part of the journey. Rarely a journey is one straight path.
Needless to say, the FIRE journey is not an easy one. It is simple. Yes. In the sense of what you need to do it is very simple. Maximize your earnings, maximize your savings, invest and widen the gap between earnings and spending. Likewise though, there are many parts of your life interconnected that must synch and align for everything to work out and fall into place. From your own physical and mental health, to your own variety of responsibilities with your family. It can be very complex.
I have been dying to sit down and write more since my last post called “Pandemic Proof Finances.” When I thought I had everything all aligned, even during this Corona virus time and I was perfectly on track to reach my goals this year.
Everything was secure. My teaching job gave me nothing to worry about as I saw thousands of people losing their jobs and feeding the unemployment rates. My rental was doing fantastic and I had nothing to worry about because my tenant is a subsidized housing program participant; which means that I get paid mainly by the government not the tenant.
The only thing I had to worry about was making it through these crazy times of uncertainty as we face a potential fatal virus of still unknown consequences.
Like everybody else we went through the pain of wiping our groceries, paying extra for food, hoarding a few things trying to create a small inventory of food to feed our family of six, plus one more person (An extra family member who got stuck with us due to the pandemic) in the given case the food distribution chain broke down.
Of course, we also faced the “gruesome” fear of getting to our last roll of toilet paper!!!
Somehow though, things worked themselves out. Financially we made it. Safety wise, we kept to ourselves, we practiced social distancing rigorously, as we saw the images in New York of refrigerated trucks outside of hospitals storing deceased Covid-19 victims. We also saw the horrible images of a world that is still ravaged by inequalities. Countries where the most basic access to medicine is a privilege that only a small percentage of the population can enjoy.
To add more stress to our pandemic situation, we added a new member to our family. My mother, who had come to visit for just a few weeks, got stuck with us since the time when the world shut down. This added a lot of stress to our marriage, our family dynamic, and of course it gnawed on our budget and finances one day at a time. This could be a whole post in itself, but I will summarize it as this: I have one heck of an amazing wife- It has not been easy!
More of 2020
We made it to August, enjoying our small pool, which became the focus of our summer entertainment. Usually in August we go on a family camping trip. This year though we were leaning on the idea of just calling it off. However, by August we noticed a lot of people taking small trips and enjoying themselves. The kids were devastated with the idea of not going on our yearly adventure. So on a whim, we decided to go for just a few days. As long as we followed the same safety guidelines recommended by CDC, such as washing hands, social distancing, etc, we should be OK, we thought. Usually we go for 10-15 days, we decided to go for only 5 days.
We got everything ready. New front tires for the car, small muffler repair to our old trusty minivan, bought our provisions, etc. We were ready!
Before we knew it the days flew by and we were all waking up early, getting in the car, all bags in, even the dog was excited for the big adventure. Coffees set in the car’s cup holders. Camper hooked, all the lights on, cruising the last minutes of the night as the sun was trying to come up. Little did we know that our trip was not going to go far at all.
About 10 minutes away, maybe one mile from reaching the highway, we settled in our seats, ready to enjoy the ride, maybe take the first sip of home-brewed coffee with Gregory Alan Isakov at dawn as the soundtrack of our 2020 summer vacation.
Out of nowhere, and in a matter of a split of a second a car traveling in the opposite direction rear ended another car that was waiting for us to pass, so it could turn left. The rear-ended car got driven right into us.
That is really the aftermath explanation after we were able reconstruct what happened. In the moment it simply felt like a drone attack; out nowhere we were impacted, and it was hard.
Our driver’s side took the brunt of the impact. Our car got impacted all the way from the front to the back. The airbags got deployed. I managed to keep everything going relatively straight despite the impact and in a blink of a second we stopped. My wife asked me to call 911. She was hurt. I felt extremely tight on my back and neck, but I was conscious and facing probably the worst moment of my life; my kids!
Taking that first look to the back of the car wondering if they were OK was terrifying. I was fearing the worst. Were they hurt? Or even bleeding? Killed? Had I just lost one of my kids?
Luckily, they walked out of the car completely unscathed. Unreal! The rear window on the side of the impact also exploded. The sliding door was also damaged and caved in, but nothing touched our kids. Unfortunately, my wife suffered a triple femur fracture. We don’t know if it was caused by the impact, even when her side was not impacted directly, or if it was due to the impact of the airbag.
She was rushed to a nearby hospital and had to have surgery that night to have an intramedullary nail; which I thought it was a pencil like kind of support but in reality it is more like a rebar, driven from the top of your hip all the way down towards the knee.
Since the day of the accident until now it has been a whirlwind of doing, from taking care of her, the kids, phone calls, answering to our lawyer’s emails, making meals, going back and forth to the hospital, appointments, and my own physical therapy. I was supposed to get back to work few days later after our trip but I had to take two weeks to stay home as she regained some mobility, and we sorted out the so many things going on in our lives.
Did we get off completely off the FIRE tracks? Is everything lost?
Well, my first thought was this is the end. We are going to be buried with bills. Right away I was advised by a good friend of mine, who is a lawyer, to get legal representation. He didn’t have to say much more than “Insurance companies feast on people who are not represented legally.”
That ended up being a pretty smooth process, although from the beginning I knew there were going to be some hard pills to swallow with all this.
When you get in a car accident there are two parts, maybe three, to deal with. The simple one is property damage. The cost of reparation or replacement for a vehicle. Who is at fault, etc.That is pretty straight forward. In our case I knew my car was worth nothing. I had bought that car for two thousand dollars 5 years ago, and although it was reliable I knew I would have been lucky if I got even one thousand back.
The other issue to deal with, is bodily injuries. This can be extremely difficult to deal with, because in reality sometimes all the money in the world can not repair an injury that will also have life long consequences. It is difficult to determine what the needs for therapy may be in the future, how much suffering a person will sustain in the coming years as a consequence of an accident. It is hard to put a price tag on a missing limb, brain injuries, the ability to walk, or even losing a family member. Likewise, it is extremely difficult to face the bottom line, which is the fact that your recovery or reparation paid to you and your family will be determined by the kind of coverage the person at fault has. If the amount of that coverage is not enough, you can then tap into your own insurance policy if you have underinsured motorist coverage. Which means exactly that; if you get in a car accident, as long as it is not your fault, and the damages can not be covered by the insurance of the other driver, your own insurance will kick in to cover those expenses and compensation.
The third aspect to deal with, is the one related to justice and the desire of seeing the law punishing reckless behavior such as speeding, cell phone usage and in other instances DUIs, etc.
In our case, there was very likely some sort of distraction going on in the vehicle that caused the accident. The accident occurred on an ample two lane road on each side(4 lanes total), straight, very light morning traffic. For the kind of damage we suffered, and given the fact that we were impacted by a car that was not in motion, but pushed with such force into us that totaled our car, it leads me to believe that the car at fault was going easily over sixty miles per hour on a 45 zone. Was the person texting, talking on the phone or watching videos while driving or didn’t even brake? We will never know, because unless there is a fatality in a car accident the police does not check phones at the scene of the accident, and getting those phone records may cause another hefty expense ultimately diminishing your compensation or reparation.
You hear all the time of people getting sued left and right for what seems to be petty things, but it is not as easy as you would think. Besides that, it may not be worth it at all if the person you are suing does not have the means to pay for damages or bodily injuries. For example, it would not be worth it to sue an individual who is 40 years old, living in an apartment building, earning a minimum wage, with no assets. What could you possibly get to compensate your damages even if your lawyer ends up garnishing wages? If a driver hits you or someone in your family, by a driver that only has a 50K coverage, it may look like a 35K payment(Standard fee for lawyer’s is a third of the compensation paid) is nothing but that may be the very best shot you got at getting some compensation for damages. With that said, if you sustain a severe injury that will impact your life forever, this compensation will indeed be a drop of water in an ocean of medical bills. On the other hand, suing the driver may get you nothing at all but frustrations.
Legal representation is also expensive. This is not a complaint. There are many costs involved in litigating a case and lawyers have to upfront these expenses hoping that they will be compensated when the case is resolved. The standard fee is one third of the insurance pay out or compensation goes to the lawyer’s office. If you are compensated with $100,000, the lawyer will keep roughly $33,000.
They do not have to take your case either. They can decide if they want to represent you or not, which makes it for a good profitable business.
Besides losing 33% of a possible settlement from an insurance company, you may also have to pay back to your own health insurance company. The expenses of your treatment upfronted by your health insurance, such as surgery, ambulance transportation, therapies, etc, may have to be paid back. Once that you are compensated, if your health insurance company paid for your expenses in the first place they will very likely exercise what is called subrogation, which basically gives your health insurance company the right to be reimbursed for what they paid on your behalf.
It has been a very trying year. And this where we are at… deep sigh!!!
A wife who is recovering from a triple femur fracture. A summer vacation that got ruined after the first 10 minutes of the trip, E-learning unfolding, still at the mercy of a threatening world pandemic, a very unclear financial horizon, and possibly on the hook with some medical bills. Plus, last but not least a co-living situation with an extra family member who is still stuck with us. How many more months of 2020?
But there is always a silver lining to any situation, and I have learned that when you think you got it bad, for sure there is always someone in much more pain and suffering. I am thankful for having my family all together, and despite our accident situation we are getting our lives back day by day.
Lessons Learned During These Few Months
First of, I regret, and I think it was a terrible decision to simplify my auto insurance buying only liability. The underinsured motorist coverage is a must, at least for bodily injuries; for property damage depending on how old your vehicle is, it can be debatable.
If you are in a car accident and you are not at fault, but the other party has, let’s say a 50K coverage, you may be in trouble to cover all your medical bills. Even if your own health insurance is terrific and covers most of the bodily injury, it is highly likely that you will not be compensated for the pain and suffering from a severe injury, such as a broken bone, losing a limb, a brachial plexus or brain injury where your current ability to even work will change forever. 50K will hardly cover medical expenses.
And let me share this nugget with you: There are companies out there selling products with only 50K coverage for bodily injury. So protect yourself and your family. Underinsured motorist coverage is a must.
Likewise, if you are on the other side of the equation and you are at fault with only a 100K coverage, and the other driver suffers a severe injury, your 100K coverage will not be enough if that person, for example, loses the ability to walk or any cognitive ability as a consequence. If you are working towards FIRE it is likely that your net worth will be above that amount and lure any lawyer to file a lawsuit against you on behalf of the victim.
For all these reasons, I went from only having liability coverage to full coverage with underinsured motorist coverage plus an umbrella coverage up to 1 million dollars. Yes, it costs more but I sleep better. I would hate to lose everything I have managed to save in the given situation I get in a car accident and I am the one at fault.
Two Years of FIRE
Maybe almost three…
I am still far far away from FIRE but my short journey proves to me every day that I am simply much better off today that I have ever been.
First of,I have saved enough to feel secure. I have no financial worries about covering any expense, mortgage, etc.
We are still undergoing a world crisis and potentially we will be facing a financial one in 2021. I have no worries. My job is secure, my rental is paid by the government; life is good.
We had a devastating event that a few years ago would have caused us a lot of financial unrest. Today, thanks to working towards financial independence we had no concerns whatsoever making it over this hurdle. I was able to purchase a new used car in no time and I felt empowered when negotiating for it. I felt like I could get anything I wanted and on my terms, or at least for what I considered a fair price.
I am estimating a small compensation from the insurance company representing who caused the accident and by no means I am happy about this. There is no money amount that could equate the suffering my wife has endured. But that’s life. Unfortunately we cant rewind time. Once we fully make it through all this craziness we will deploy again our plan of buying another rental; we are currently evaluating the option of and Airbnb as well.
I will be posting soon and update on the net worth.
In the meantime, we are happy we are all together again. Our sails are filling up again and we continue on our journey.
Learning from other people’s experiences can be a great help. Feel free to share this with anybody that may benefit.
If you have any question, suggestion drop me a comment below.