Financial fragility is real

Fragility. It’s the word, concept, feeling I can’t escape this week. Our financial lives are incredibly fragile. No matter our level of preparation, forces significantly outside of our control can rewrite the stories we’ve worked so hard to pen.

 

It began to sink-in on the day millions of Americans opened their paycheck, only to see zeros staring back them. The government’s partial shutdown has led to a nightmare scenario for a reported 800,000 government workers and millions of government contractors. These people did nothing wrong. They don’t deserve this. Yet, here we are.

 

Or maybe it was the email I received this week from a kind woman who lost her home in the Camp wildfire out in southern California that sent me over the edge. Of course, that was even before I remembered the thousands of other Californians who are in the same boat.

 

You know, come to think of it, I believe it was the message I received about a man going through a divorce and the brutal financial impact it was having on both him and his former partner.

 

It could have been the woman I wrote about a few months ago who had everything perfectly planned, including her multi-million dollar nest egg, that was quickly vanquished by the costs associated with her husband’s Alzheimers.

 

Nope. The straw that broke the camel’s back was much more personal.

 

You’ve sat in a doctor’s waiting room. You, like me, have done everything in your power to not touch anything, because hey, you are sitting in a room full of sick people. I sat in my doctor’s waiting room this week, and despite my generally positive demeanor, my mind went to a very dark place. What if, and I mean if, the malady which led me to this germ factory was what my Google search said it could be? What if? I started to read the back of my insurance card, then navigated to the insurance company’s website on my smartphone. Very quickly I realized how inadequate my coverage is, and how big a financial problem I would have.

 

Ruin.

 

That’s what I was facing if the appointment didn’t go well. In fact, a friend on Twitter had just posted a picture of her $193,000 medical bill. How does one recover from something like that? I’m fine, by the way.

 

Crafting a reasonable financial life is incredibly difficult. It’s hard if it goes well, and it feels impossible when it does not go well. From student loan debt, to housing, to raising a family, to paying for their college, to retirement—our collective ability to hit these milestones feels like a miracle. And let’s not forget the accomplishment that is surviving on less than living wage.

 

The great assumption we’ve all made is everything will fall into place if we’re disciplined. It’s simply not true. I’d love to tell you it is, but this isn’t a made for TV movie. When I was a kid I used to watch a series of programs called “After-school Specials.” They were tidy little stories which introduced a tad bit of conflict and/or teen angst, and then surreptitiously resolved the issue with a moral of the story to boot. Financial fragility casts a different shadow.

 

The logical conclusion would seem to be an emphasis on the importance of an emergency fund. But that’s not my conclusion. The ham-handed “that’s why you need an emergency fund” or “go drive Uber” prescriptions are tone-deaf. These stories I’m sharing aren’t cautionary tales to help prepare you for tragedy. These stories are about these people, not you.

 

Any of us can have our financial lives ripped away.

 

Most of the time I leave you with actionable advice on how to manipulate your behavior to secure better outcomes. Today? Today I want you to place yourself in someone else’s shoes. I want you to immerse yourself in others’ realities. You can’t take your emergency fund with you or even your nest egg. I want you to imagine you are a federal worker who isn’t getting paid. For the sake of the exercise, you don’t have savings, you can’t easily secure a personal loan, and you don’t have family who can bail you out.

 

Swim around in this. If you’d rather be the person who lost everything in a wildfire, be that person. If you think trading places with the lady who has $193,000 in medical bills is a better exercise, do that. I’m not asking you to solve the problems at hand. I’m asking you to experience someone else’s despair.

 

Empathy and grace are often absent in the financial world. We’ve divided into the have and have-nots, and we aren’t doing ourselves any favors because of it. Choosing to overlook or be apathetic towards someone’s misfortune, or even circumstances brought on by poor decisions, doesn’t benefit any of us. I’m asking you to care more. There are millions of Americans hurting right now, and they need your support.

 

3 thoughts on “Financial fragility is real

  1. Outstanding article! I wish a lot more people would see this, feel this, and realize that most of us, no matter how well we have planned and executed our financial lives could be just an accident or serious illness away from having it all fall apart. I’m weary of the sanctimonious people who believe that “those people” just need to take responsibility for their lives and their actions. Many many folks are struggling and hurting, through no fault of their own, while the divide between the “haves” and the “have nots” keeps increasing.

  2. Good article! Add one more financial ruin to your list would be civil lawsuits, other than divorce. Just like the other wipeouts, this happens to people quietly, and one at a time, so hardly anyone notices. Even for a fairly meaningless outcome, attorneys for both sides can string things along by an accommodating court. It’s their rice bowl. Aside from insurance, which is really just buying attorney power, you can fully understand Federal and State laws to protect yourself. They are your laws, and it is your right, and you are allowed to real the laws. There are good books on measures to take, especially from litigious professions, such as doctors. You can’t take action after the fact. Really, it’s all nearly free, and can make a huge difference. For example, a pretax IRA in California is protected only to the amount to provide a living for the debtor, which is up to the courts, whereas in Florida is has unlimited protection. On the other hand, a 401k is Federally protected, so rollovers have different consequences. Read, learn, and act.

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