Sometimes you have to deal with things that you have no control over. This has been more than clear this week to anyone living in the Carolinas. And it really hit home for me yesterday.
Anyone who has visited me in my office this semester had a chance to see the wrist brace that I’ve been wearing all summer. And yesterday I finally had surgery to repair that injury. The surgery went well and now I’m recovering at home for a couple of days. And while I’ve dealt with the aftermath of anesthesia before, this was my first experience with a nerve blocker. The up side of the nerve block was that I had no pain for 20 hours after my surgery. The down side was that my left arm was completely numb for that same time. I had no control whatsoever over its movement. It was actually fascinating to me. My left arm was just dead weight (which was MUCH heavier than I would have expected!). I wore a sling to support it and just had to live without my left arm for the day. (Teeth and feet become very useful tools when you only have one arm). I just had to find ways to work around the thing I had no control over.
Sometimes you’ll face financial challenges that you can’t control. The unexpected auto repair. The annual tuition increase. The rising price of gasoline. A medical situation. The cost of the bar exam. Air travel for a family emergency. Financial stress can come in any number of forms that you can’t control. But what you can control is how you prepare for and react to these things. A budget. An emergency fund in savings. Insurance. These are all preventative measures to deal with the things you can’t control. Loans. Credit cards. Side jobs. Selling things you don’t need. These are all reactive measures you can take to relieve your financial stress.
We will all face things that we have no control over. But we all have control of how we prepare for and react to these things.
Sometimes it’s just way too hard to choose only one topic for my weekly writing adventure. This week there are two things that both seem to need urgent attention, so the Moneywise Tip is going to be a twofer.
First up, September 4 is the last day for students to purchase the Penn State Student Health Insurance Policy (SHIP) for fall semester. And while you are young and healthy it’s easy to think you can get away with not having insurance. But you really shouldn’t. One broken bone. One bad case of the flu. One inflamed appendix. Any one of these can happen at any time, and without health insurance it can easily set you on the path to a lifetime of medical debt. You can read more about that here. But know that the choice to skip insurance is a game of Russian roulette you really shouldn’t play.
And for the second topic of the day, a student came to me last week to discuss something that scared both of us. She came in to say, “I came to give you the information you called me about this morning.” She went on to tell me that she had received a phone call from me asking for her birthdate and Social Security number for a student job she was applying for. One big problem: I hadn’t called her. The caller had used my name, but I didn’t place the call. It was a scammer. The reality is, anyone with access to the internet would be able to figure out that she is a student at Penn State Law, and I am the Financial Aid Director at Penn State Law. I’m actually kind of stunned that someone would do this level of research to try to run a phone phishing scam. But it happened. So how do you protect yourself against this kind of thing? My rule of thumb is that I never give out personal information on a phone call that I did not initiate. No date of birth. No Social Security numbers. No credit card numbers. If I didn’t place the call, no one is getting that kind of info out of me over the phone. Period. And thankfully, this student was smart and didn’t share that info on the phone, even though she thought it was me on the other end of the phone. WHEW! (Just so you know—I would never ask for that kind of info on the phone. I would always ask for you to bring physical documentation of these things.) Scammers are still everywhere, so make sure to protect yourself!
What is the one thing that you should always buy with hopes of never using it? It’s not that embarrassing pair of skinny jeans in the back of your closet. It’s not the platform pumps that you grabbed on clearance and never wore. It’s insurance. Health insurance. Car insurance. Renter’s insurance. All of it is important. And you hope and pray that you never need to use it. But if you ever do need it, you’ll be amazingly grateful that you have it.
Today I’m going to focus on health insurance. I have a really good health insurance plan through Penn State. I pay extra for the option of a lower deductible plan. And I’ve never been so grateful for it as I was at the start of August. One fateful night at the start of August I started experiencing stomach pain. At first I thought it must have been something I ate, but my husband and I had eaten the same thing for dinner and he had no ill effect. A couple hours later I found myself in the emergency room, and then spent the next few days in the hospital correcting the issue that had caused my great pain. And recently I got a hospital bill for just over $1,000 for that ER visit and hospital stay (due to my deductible and co-insurance responsibility). And that sounds like an awful lot of money. Until I think about what that bill would have been without insurance. Without the health insurance my bill would have been over $19,000. Nineteen thousand dollars!!!! I can’t even comprehend the financial mess I would be in if I had to come up with that kind of money for four unpleasant days at the hospital!
If you don’t have health insurance…now is the time to act. Penn State students are eligible to purchase this platinum plan offered through Aetna. The deadline to purchase for fall semester is Tuesday, September 6. Worried that you can’t afford it? Stop by the financial aid office. It is possible to increase your student loan eligibility to allow for the cost of purchasing insurance.
No one ever likes to think about spending money for an insurance plan they may or may not ever use. But the cost of not having it could be much, much greater.
For me auto insurance has always been one of those things that I’ve had on auto-pilot. I pay for it, hope I never need it, and I forget about it. Until last Wednesday. That’s the day that PA-322 emerged victorious in the battle of Prius versus snow covered roads. And, after thankfully escaping unharmed and driving the damaged car away from the scene of the accident, that’s the night I started paying a lot closer attention to my auto insurance policy.
When you set up your car insurance, there are a lot of things you need to pay attention to:
- How much is your deductible? The lower your deductible, the more you’ll pay each year for your insurance,but the less you’ll pay in case of a claim. I opted to keep my deductible low, so now I only have to come up with $250. My insurance company is going to cover all of the rest of the bill to repair the car.
- Do you need comprehensive insurance? If you carry only the state minimum insurance, that covers only liability and possibly collision. Collision actually would have been enough for my accident. But on that very same snowy day a friend of mine hit a deer. And he was not carrying comprehensive insurance. His accident was not covered. At all. Comprehensive covers you against things like theft (of either the vehicle or property within), glass breakage, damage resulting from something other than a collision (such as fire or falling objects) and damage from hitting an animal. There’s a reasonably good chance that one of these things (especially the deer situation) could happen in central Pennsylvania, so if you are not carrying comprehensive insurance, it might be worth adding it.
- Do you need a replacement vehicle during repairs? I do pay a little extra to cover the cost of a rental car during the time my car is being repaired. It turns out I didn’t really need it this time, so I’m saving myself a little money (my insurance covers only 80% of rental car expense) and living as part of a one-car family until my Prius is repaired in a week or so. (I’m grateful that my friends were willing to cart me around for a day until we sorted out the details of how to make that work!) But if you can’t get by without your car, rental replacement is coverage you should consider.
- How much work do you have to do up front after an accident? I’m feeling very fortunate that my insurance company has been wonderful through this process. They have a deal with several area auto repair shops where I can take my car without having to have an insurance person come view the car and without having to get multiple estimates. As long as I stick with the preferred shops (and the one I would have chosen anyway was on the list!), then I just take it in and forget it. The insurance company will accept their estimate without comparing it to others. And the insurance company will make payment directly to the auto shop. I just have to wait for the repairs to be complete then pay my deductible to the auto shop when the work is done. Amazingly easy. And that’s a really big deal. How does it work with your insurance company?
No one ever wants to think about using their auto insurance. But the day is likely to come when you’ll need to. Do you have enough coverage? Can you afford your deductible? Will your insurance company be easy to work with after an accident? It’s definitely better to think about these things BEFORE you find yourself losing a battle against a snowy road or a wayward deer.
Is it a good idea to regularly spend money on something you hope you never use? If the purchase in question is insurance, the answer is yes. Auto insurance is required by law, but many people forget that it is also important to protect your belongings. If you own your home, you definitely think about protecting that investment, but renters should also carry insurance to protect the things inside the home. Renter’s insurance is not terribly expensive, and could save you a bundle. This insurance will protect the contents of your apartment against fire, theft, water damage, vandalism, and a variety of other perils (learn more at http://money.msn.com/home-insurance/the-basics-of-renters-insurance-insure).
Before you buy, however, you should do a little research. Try to evaluate the value of your possessions so you know how much coverage you need to carry. Decide whether you need coverage for actual cash value (how much your things are worth in their current state) or replacement value (how much it would actually cost you to replace your things if they were destroyed). Replacement value is likely the better choice. You’ll be amazed at how quickly the value adds up. Imagine having to repurchase just the clothes hanging in your closet. How much money would that take? Now add in your pots and pans and dishes. Now add your case books and study aids and computer. For about $200 per year you can buy enough insurance to protect these items. Compare that against the cost of replacing even a few of your things without the help of insurance, and you’re likely going to find renter’s insurance to be worth the investment.