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Preparing myself financially for living on disability

Frequent Contributor

Preparing myself financially for living on disability

I've been around myFICO for quite a while. Initially came here to clean up my credit and learn some skills to live a better financial life moving forward. That worked out very well for me: My scores are great -- 848/850/850 -- I have no credit card debt, have a little in savings and IRAs, etc etc.


The bummer is that I am facing the move from lucrative full-time employment to being on disability. I have had COPD for a long time and it's progressed to the point that I'm finally taking my doctor's advice and pursuing disability. She's been suggesting it for over five years, but I am stubborn and was trying to work and save as much as I could before the inevitable. A recent exacerbation has made clear to me that this is something I need to do.


I'm fortunate that I have company provided short term disability to cover me 30 days at 100% of my salary, then the next 60 days at 75% of my salary. I have already initiated my claim for long term disability, which is a policy I pay all of the premiums on. That's a Very Good Thing, as those payments will come to me tax free, and will be 60% of my salary. Barring any weirdness or complications, they should pay until I reach full retirement age, which is 66 years and 4 months (March of 2023). They will expect me to apply for SSDI, which shouldn't be a huge deal, as my COPD is what the SSA calls a "listing level disease", and I meet the criteria. Long term disability will offset what they pay me by any amount I receive from SSDI. At some point in the process, I'll be officially terminated from my job (my stomach clenches looking at those words), and I'll have three weeks of vacation pay coming to me.


So that's the background. What I'm hoping for here are suggestions about things I can start doing NOW to prepare for this.  We've not been super frugal, but we live below our means. We don't take vacations. Don't have kids. I put $300 in savings weekly, but I also don't stress too much if I have to take out a couple thousand for an unexpected expense. That's what emergency savings is for, right? It always hovers around $10K. I also have another $6K Money Market account that's where I throw all my credit card cash back, rebates, small windfalls (for example a $80 check I get every year for paying my car/house insurance in one lump sum). I rarely touch that, as I get a kick out of watching it grow.

I've got about $40K in IRAs, which isn't much, but considering where I was when I first visited myFICO, it's a freaking miracle Smiley Tongue

I'm already going over our expenses with a red pen and looking for places to cut back: Bye bye, Sirius XM. So long, office landline I'll no longer need. Adieu, UberEats. You get the picture.

If/when I'm determined to be totally disabled, I'll apply for my county's homestead property tax exemption, which allows you to exempt $25K of the market value of your home for property taxes. I'll also be looking at options with my student loans OTHER THAN the TPD discharge. I really don't want to get a big tax bill for the forgiven amount, however, my loan amount is so small, it might be worth it to get rid of the $128/month payment. I need to know where to go to get the info I need to make the best decision. ** Update ** As part of the new tax plan, discharged student loan debt in the event of death or total and permanent disability will no longer be taxable. The provision expires after 2025. I have no further details, yet.


Our biggest vice is food: I've been working long, long hours in an attempt to keep up at work (60/70 hours a week). My husband works full time at a low-paying retail job. I make -- or made -- three times what he does. Our schedules are crazy. We are always tired. He stops at the grocery store several times a week, but no one is planning meals or doing mindful shopping. That means lots of food spend, rare "meals" and an embarassing amount of food waste. And though we live in an area where prepared food delivery wasn't an option (beyond one crappy pizza place) now UberEats delivers wonderful things at the click of a button. I confess. We have abused it.


I'm looking at all this in as positive a way as I can. I may no longer be able to be an executive at a big company, but using my brain and working at a manageable pace, I should be able to wrangle our money/lives into an ok place, right? I'll have time to plan meals, and the time to be able to prepare them. I get so out of breath it takes me all day to prepare beef stew, for example. Can't do that when I'm sitting at my desk (I work from home) 12 or more hours a day. 


So how about it? Anyone have any ideas?

EX myFICO 850 - EQ myFICO 850 - TU myFICO 850
Goal Score: 800+ across the board! *DONE!!!*
Message 1 of 10
Established Contributor

Re: Preparing myself financially for living on disability

It sounds like with the tax free disability payments your income will not drastically decrease.   You've also said that currently 75% of your household income comes from you, with your husband working a low-skilled job.


Is it possible to move to a cheaper area as you will not be tied to your work, and your husband could find similar employment elsewhere?  I'm not overly familiar with COPD but a warmer dryer climate could help reduce the severity of symptoms too.   Additionally, as your condition progresses it might be necessary for your husband to spend less time working and more time caring. Laying the foundations now will be helpful in the future.


My final thought is consider inflation.  I believe the LTD does not increase, so you will need to put aside extra saving to make up the difference over time.

Message 2 of 10
Frequent Contributor

Re: Preparing myself financially for living on disability

Thanks for your reply! We already live in an area with a very low cost of living. VERY low. As I am/was a remote worker, my salary was based on the corporate headquarters address, which is on the California coast. So I have/had the best of both worlds.


When it's too cold/hot/humid I stay inside anyway, so it doesn't matter much what the weather's doing outside. Also, my brother lives in the house next door and my best friend lives a block away. They make a great team :-)


I've spent some time today continuing to hack away at my expenditures (including dropping my $20/month myFICO plan, which was hard to do), and I'm starting to suspect that these fairly painless cuts combined with being smarter about groceries/meals/food-in-general may find me with more in my pocket at the end of the month ON disability than while I was working so many hours. I continue to keep putting every available cent into savings, as I have been doing since October 2014.


You truly cannot put a price on peace of mind.

EX myFICO 850 - EQ myFICO 850 - TU myFICO 850
Goal Score: 800+ across the board! *DONE!!!*
Message 3 of 10
Frequent Contributor

Re: Preparing myself financially for living on disability

Hello. It is good that you are trying to keep a positive attitude as you adjust to the loss of your vocation, along with the worsening of your disability. Many people who have to cope with serious loss of function have a lot of difficulty, and of course that is ok. But I hope that the road is a smooth as possible for you.


* Look into ABLE accounts, which allow you to set aside your savings for disability related expenses without endangering benefits such as Medicaid or disability.

* Check with your local Center for Independent Living to see if any help may be available to you for things like cleaning and meal prep. You may reject this idea at first (especially if you are used to being very independent!), but consider the fact that you have worsened enough to be unable to work entirely, and preparing a meal takes all day (as someone with lifelong chronic pain, I understand). Some home based care services might be helpful. Not necessarily every day, but even a couple times a month or once a week to help you prep a big meal you could freeze, keep the house clean, and whatever other tasks are difficult for you to keep up with.CIL will discuss with you. They may also have more referrals for resources.

* Do not be ashamed to accept government assistance, local charity, or any other type of help that may be offered you. No person is self-made, no matter what the glossy magazines encourage us to tell ourselves. We are all interdependent on one another. Living on disability - I am speaking from experience, both by myself and then married also - can mean living below poverty level if you insist on going it alone. So don't. :-) 

* All those money management skills you have used to keep those credit scores up are going to be needed again now, but they are going to be required to keep you from drowning in debt as many people do when they feel a sudden loss of income. Make absolutely sure you stick to a "cash diet" (buy only what you can immediately pay for in real money, regardless of method of payment) and pay your bills in full each month.


Best of luck.

Ch7 discharged 10/2017. Pre-file FICOs high 400s.
04/2018 EX 644; EQ 670; TU 648
Message 4 of 10
Community Leader
Valued Contributor

Re: Preparing myself financially for living on disability

Wow, gamegrrl! Much respect to you for your planning and bravery! It sounds like you are in a pretty good position. I don't know a lot about permanent disability or retirement, but I do know you can save a boatload by planning and prepping meals. They don't have to be complicated or time/energy-consuming. Maybe a couple days a week you could plan something extensive like that, but if you keep it simple to a protein and veggies, it will save a lot of energy and money. This is something my husband and I have tried to work on.  Also, I second the suggestion to utilize any public assistance available. SNAP is there for a reason so, if you and your husband qualify, use it! I am in a field where I see abuse of government/public assistance, but also where I see the validity of people who truly benefit from it. It's easy to judge, and people certainly will, but they don't know. They just don't know. I'm glad you're here on the forum, and it sounds like you've made great use of the knowledge and resources on here. Please keep on with us as you go through this journey. Smiley Happy

Current Scores------ EQ 675; TU 658; EX 689 FICO 08--- Gardening 5/25/18 to ~12/15/18
Beginning Scores-- EQ 632; TU 576; EX 619 FICO 08 (06/13/16) - BK7 discharged 11/2015

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Message 5 of 10
Super Contributor

Re: Preparing myself financially for living on disability

gamegrrl thanks for sharing your story and how you are dealing with many different aspects of life. Glad you are out here gleaning new knowledge that may be of use to you as your life transitions. Leaving full time employment outside of income is sometimes a psychological shock so facing it is often a challenge. A friend of mine from the military that served in Vietnam acquired COPD from activities of war so I was close to him and learned about COPD. Then, out of the blue a few months ago my cousin informs me she has COPD and it is getting worse. Seems you are not alone (Even though it may feel like it from time to time). Share with us what you learn if appropriate. Everyone here can benefit I am sure Smiley Happy
Starting Score: 829 Fico TU08
Current Score: 835 Fico TU08
Goal Score: 850

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Message 6 of 10
New Contributor

Re: Preparing myself financially for living on disability

Knowing that this was a liklihood is a very beneficial thing. I was faced with going on disability and I didn't see it coming. Needless to say I was not prepared for it when i was diagnosed Scheuermann's Kyphosis in 2013. I had no real savings to speak of and my credit was in the crapper. Thankfully I was eventually able to rebuild my credit even while living on the income from SSDI and the offset amount from my LTD policy. Knowing that this sort of thing is coming and planning/preparing for it I am sure that you will be just fine.


Out of curiosity who is your LTD claims administartor? If it's Sedwick then let me offer you this bit of extremely close attention to any and all documemts and/or evidence that your physician submits. I did not do this and all it took was a wrong date on a form for them to deny my claim. This led to having to hire an attorney who ultimately got my claim approved but it took 4-6 months and cost me about 6K.


As far as SSDI I wish you luck on your first go 'round. Get your application in ASAP because the typical MO seems to be denial, appeal, denial and then at that point you'd be best bet to hire an attorney experienced in SSDI. Might be a good idea to have one in mind before it even gets to that point.

Message 7 of 10
Frequent Contributor

Re: Preparing myself financially for living on disability

Thank you, everyone, for your responses! I'm working hard to stay as positive as I can. I'm a bit of a workaholic, and over the years I've come to define myself by what I do and my successes. This whole process/mindset is alien to me, and it's imperative that I not let it get to me.


I'm still working on a new budget, trimming fat wherever I can, but avoiding the whole "scorched Earth" budget thing. 


One thing I'm looking into is converting my HELOC to a regular mortgage. I'll be searching MyFICO for info on that after I post this message. Our HELOC has a ten year draw period (we are 7 years in) and then there's a 30 year repayment period. Three years from now when the draw period ends, chances are there's no way we would be approved for a new loan, if that's how they handle it. I'm wondering if it would be better to try to convert it to a standard loan now, before I'm officially unemployed and on disability.

EX myFICO 850 - EQ myFICO 850 - TU myFICO 850
Goal Score: 800+ across the board! *DONE!!!*
Message 8 of 10
New Visitor

Re: Preparing myself financially for living on disability

Gamegrrl, thank you for these posts.  I rely on suggestions and information from these boards.  I spent a few years paying down bills and rebuilding my credit and was then diagnosed with Alpha-1 Antitrypsin Deficiency, so I have genetic COPD/Emphysema as well as genetic liver disease.  We had a family business for over 20 years which we lost last year. I'm now going down the disability path, as I'll go on supplemental oxygen next week.  I'm 46 and don't have any sort of nest egg except for the equity in my home.  I do freelance work but it's not enough to live on. Hearing what you are doing/have been doing and suggestions from others is very helpful.  I've been pretty much living off my savings since July, and that's running out.  I am finally getting a cheaper insurance plan, but had to keep a very expensive plan so I wouldn't risk losing my treatment which is almost $1M/year, every year, forever. 


How long ago did you start the disability process?  I have access to free legal help through the national rare disorders organization, but trying to plan for how long I need to try and keep myself afloat.  I have managed to stay under 25% in utilization but last summer was at 6%, so I really want to pump the breaks on using my available credit.  I know it can take quite a while to get disability approved, and since this disease is so rare, it's not listed on the compassionate list for fast track yet.  While I have decent credit (760, 762 with TU/EQ, still fighting 2 issues with EX, which has me stuck at 670), with no income, I can't even access the equity in my home.  You sound like you were prepared and will do great!!  Honestly I wish I would have thought further ahead, but with our business, it was hard to do that.  I also wish you the very best of luck and well wishes in your health journey!  I know how difficult it is, and the fear of not having access to your breath.  Thank you for posting!!!!

Message 9 of 10
Regular Contributor

Re: Preparing myself financially for living on disability


genetic liver disease.

2 words (aside from my prayers for your health): Milk Thistle.  Look it up.  It's a Godsend for one's liver.

Message 10 of 10