Day two – every dollar counts – life rarely goes to plan, which is why you need a financial plan

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Climb every mountain – with the help of a financial plan

Sometimes my life seems to be going marvellously, and sometimes – boom – it changes. I think it fair to say that the last few weeks have been a bit tumultuous for me.

Most years at Christmas I like to listen to Handel’s Messiah. It is a tradition I inherited from my Dad, who used to sing it with gusto off key (sometimes also while under the influence). The oratorio is based on the bible, but it is not just a straight religious text but rather a story that tells of prophecy and miracle.  There are always bits that resonate with me.  One of my favourite lines comes from towards the beginning of the work:

“Behold, I tell you a mystery; We shall not all sleep, but we shall all be changed in a moment, in the twinkling of an eye, at the last trumpet” (1 Cor. 15:51-52).

Pretty much in the twinkling of an eye is how things have changed for me.

Four weeks ago I was flying high.  My boyfriend of four and a half months, the lovely Neil, proposed marriage.  It sounds quick (and some of his family is reeling) but it has been on ever since we started dating. You know when you know. Both of us had been heartbroken and unsure of the dating game when we first met, became friends, then besties, then before I knew it – in the twinkling of an eye – he was always at my place and had become part of my life. We kind of skipped the dating step.

A week after he put a ring on my finger I was home with a sick child. Well, he was dying at home but not so sick as he couldn’t handle the playground.  So it was that I bumped into a talented artistic friend, whose work I have long admired on Facebook, who was also doing the school holiday entertaining at the playground routine.

She had a tale of woe, of how she and her husband had planned to move to Brisbane.  They had planned to put their Canberra house on the market, sell up and then move to a new job and a new life. Then bad health hit. Her husband required three operations.  Due to the nature of the procedure and the need for it to happen urgently, they opted to have it done in a private hospital.  Suddenly they were in debt and needed to refinance the mortgage to cater for a maxed-out credit card.  I could tell that my friend was just a tiny bit panicky about these changes and their new reality.

I was sympathetic, but I was riding high on the euphoria of my new engagement, ring blinging on my finger and my whole life ahead of me.  I felt untouched by negative thinking.  I mean, Neil and I were planning a wedding, we were buying investment properties together. I had a great job, he had a great job, and we were about to celebrate our first Christmas together with this family and then go caravanning up to the Gold Coast to see my family. We were happy, happy, happy and felt like we had a lifetime of happiness ahead of us. Nothing could go wrong – positive law of attraction thinking all the way.  We were blessed.

Then two days later he had a massive heart attack.

We didn’t see it happen, both of us thought it was a stomach upset. In the twinkling of an eye, our life changed. Thankfully he got to the hospital within the crucial first 90 minutes or so.  Thankfully the operation to insert two stents went well. He was due to be discharged on Christmas Day and planned to be back in a two to three weeks’ time for a further procedure.

But then he developed a lung infection.  He didn’t respond to the antibiotics as hoped, so he was transferred to the intensive care unit, where he was for three days including over New Year’s Eve. My lovely father came up to help me mind my kids so I could go into hospital to visit him.

Suddenly, in the twinkling of an eye, our plans changed. We cancelled the family caravan trip to the Gold Coast. He was in the hospital for 18 days, and he is going to be off work for a long time – at least eight weeks initially and then he will need a second operation.  And I will have to take carers leave to care for him, at least for some of this time.  Not the Christmas, or the New Years Eve celebrations, we had planned.

When life doesn’t go to plan, a good financial plan starts to kick in

The biggest worry, when there are health issues or life changes, is the ability to pay the bills and continue to manage the day to day expenses.

In our case, this is less of a worry because my man is a stable public servant with over two years’ worth of sick leave.  He also has seven months’ worth of long service leave and a permanent full-time job.  He can weather this.  But once we are through it I will be suggesting to him that he review his private health cover, his will is up to date, that he has a power of attorney so that someone can make urgent medical decisions for him, all necessary insurances are in place, and that he has enough cash reserves on hand.  Thankfully also because of the nature of his illness he was being treated in the public hospital system so (for now at least), there are not large medical bills.  He will need to take a cocktail of medicines for the rest of his life, which will add to his expenses.

But what if he didn’t have a secure job with lots of sick leave?  What if he was only on contract? Or if he was not yet permanent? Or what if he ran his own business and he didn’t have the staff to cover him?  What if he was the main breadwinner and was providing for young children?  What if he didn’t make it to the hospital in time?  What if the only specialist available just before Christmas only accepted private health insurance patients and he didn’t have coverage?  What if he was left having to pay a huge ‘gap’ for 18 days in hospital and specialists?

Throughout 2017 I have been working with my financial planner, Michael Miller from MLC Financial Advice Canberra, to finesse my financial plan.  Because I am the main financial provider for two young children, my overall plan is consistent yet conservative.  I’m a bit of a financial know-it-all, but I have conceded that his advice has helped me strengthen my plan by identifying gaps I didn’t identify.  Like understanding the advantages of making extra superannuation contributions to my defined benefit scheme.  And the importance of taking out life insurance when entering a new relationship.

My financial plan has changed a bit since I first saw Michael. I paid off my mortgage earlier than I expected, for instance, and then bought a new inner-city apartment unit.  This has cost me more but has reduced my commute time and has enabled me to cycle to work (thus improving my well being).  Oh, and I’m now in a new relationship that is leading to joint investments, which wasn’t even on the cards when I had my initial consultation with Michael.

Sometimes it feels like having a plan doesn’t matter. But having focus is so important in a savings and investment plan.  All those little things add up, and all of them are important.  All those little things that you put off thinking you will do ‘tomorrow’, have an impact on your life today and into the future.

If ever there was a case study in why having a good financial plan is important, this is it. Because life CAN change in the twinkling of an eye.  And if it does, you want to make sure that you can still weather it.

Thank you to everyone for your thoughts and prayers for Neil. He came home two days ago and is now recuperating at home.  I’m enjoying creating heart-friendly meals.

5 comments

  1. Happy to hear Neil is home and being looked after.
    It is scary, though as you say an important reminder to make sure you have your financial house in order.
    If it interests you look up Dr Esselstyn and his case studies on diets for heart disease. Very interesting stuff.
    Best wishes to you both.

    1. Many thanks.

      Wow, Dr Esselstyn’s stuff looks harsh but effective. At the moment I am doing the CSIRO Total Wellbeing Diet, but once I am where I want to be I will investigate it further.

    2. Many thanks for your kind thoughts.

      Wow, Dr Esselstyn’s diet looks incredibly strict. Neil and I are currently on the CSIRO Total Wellbeing Diet (well I am, but he by necessity is following the meals). This is something interesting to investigate though.

  2. Ms Frugal Ears,

    what do you think of TPD & Death cover insurance provided through super funds? I am no longer working & find that these fees @ $2000 per year are really eating into to any yearly profit made. My younger husband ( 6 years) is well paid & has good super fund insurances but we have no children or dependents. We have a family home & an investment property, two cars – all paid off. We have an emergency fund (6 mths of his wages) & a $100,000 share portfolio. Plus a $48000 term deposit. I am the saver in the family & have happily ‘made do’ for most of my life to be secure. The comfort of having TPD is of course, if I was struck seriously ill & needed nursing care in home. But as you know this reduces in payout value each year & then stops completely once you hit 65. Just when I think you might actually need it. I have top Hospital private insurance (no extras) but I know this only goes so far. Not sure if I would qualify for the NDIS scheme either. A friend of a friend (an accountant) suggested dropping the insurance but what do you think?
    Would really value your input. Thanks again & love your blog.

    1. Hi Lisa,

      Thank you so much for dropping by the blog and for asking this question.

      I’m not a certified financial planner and I am not able to give specific advice. I think the key thing here is to way up the risks. It looks like you are in fact in a comfortable financial situation. You also don’t have dependents. What would be the risk of you were not working? As you mention you are not working and so you would not lose income if you were unable to work.

      Insurance is important as part of long-term planning for unforeseen contingencies, as is estate planning. But if you insured against everything you would not have much left to live on. Out of necessity, we all need to take risks in life – just getting up of a morning and crossing the road has risks. The point is to identify what the risks are and whether you are comfortable with them or not.

      As to me, I have a stable public service job with over a hundred days of personal and carers leave accursed. I have a generous defined benefit superannuation plan and a partner whose scheme is even better than mine. If either of us were made redundant we would have access to super. If either of us died, we would get a pension from the other. We could buy additional life insurance, but given we are already pretty stable do we need it? In our case, we opted not to. I know this does not suit every situation and case.

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