Our homeowner's insurance doesn't cover wind damage. It covers the usual: fire, theft, tornado. But not wind damage. Why? Because we live in a hurricane zone, where high winds are not only likely but expected.
So to insure ourselves against the wind potentially ripping our home from the foundation, we had to purchase a separate policy for that. It's an expensive policy, but I am told if damaging winds do come I will be grateful I have insurance.
Don't you wish you could purchase insurance to cover every possible scenario of life? Why is there no devastating life change insurance? There is no policy to protect you in the case of a divorce that leaves your income stretched thin. There is no insurance policy for a job loss.
And while there are insurance policies for devastating diseases and accidents, no plan is perfect. Far, far too often people are left paying hefty price tags for things that are far beyond their control.
Even with the best-laid plans and healthy emergency fund (and emergency funds are so important, if you don't have one in place please work on it now) it still doesn't mean there will be enough funds to cover everything.
So what do you do in this situation?
1. Don't panic
It's natural in the face of a disaster, any disaster. But panic leads to bad decisions and bad decisions NEVER come alone.
One bad decision usually leads to another and then another. They are like a horde of spring breakers caravanning down the highway of your life.
Don't rush into making any big choices, if you can take the time to think things through, pray or talk to someone you trust. Giving yourself space and time to breathe.
2. Don't fall into a trap of indecision
While panicking is a bad idea, so is not making any decisions at all. It is really easy to get so overwhelmed during a crisis that you just shut down and do nothing.
It can become so easy to ignore the problem or use the crisis as an excuse to make no decisions at all.
3. Make a plan- even if it's not ideal
If you get a large medical bill call your healthcare or insurance provider and see if you can work out a payment plan.
The son of an acquaintance of mine was in a devastating accident. He was taken via an emergency helicopter to a trauma hospital. It turned out the medivac flight wasn't covered by the family's insurance. The final cost of the flight for that family was $20,000. And from several news articles I've read that is on the low end of the cost.
As a parent, I can tell you the cost of the flight would not be the first thing on my mind. Saving my child would be the first thing on my mind. When it comes to your kids every parent knows, all bets are off.
That family also faced thousands of dollars in subsequent medical care. The family was already living on a written budget and in order to avoid bankruptcy the family had to develop a plan.
They worked out a payment plan with the helicopter company. They were able to do this without interest. While it wasn't an ideal situation and it will end up taking them years to pay off, it was a better alternative to a potential bankruptcy.
Maybe it's not a medical emergency. It might be another life change. If you are going through a job loss I have written a post of six things to do to make the road easier.
4. Be prepared to make tough choices
During the great recession, when the economy went downhill Jason and I had to make the decision to short sell our house. We had to cut our lifestyle back to nothing and begin making really tough decisions so we would get out of debt and get our lives back.
For us these decisions were easy, but for many it is difficult especially with kids in the mix. You want to make life as normal as possible for your children, and the idea of selling their home just seems unbearable. But sometimes there are decisions that need to be made.
5. Give yourself grace
There are many times in life when we go into crisis mode. Maybe you have exhausted all of your resources, sold your house and everything you own and you are still short. You may feel left with very few choices.
In the case of a real emergency (I am talking a major life event: forgetting to save Christmas or not factoring in the cost of school clothes in your budget are not emergencies) you may have found yourself borrowing money or using credit cards. While this wasn't the perfect choice, it may have been the only choice you felt you had at the time. Don't beat yourself up over this. Know you did the best you could and make a plan to get yourself out of debt.
We can't possibly plan for every single thing that is going to happen. Take a deep breath and know it will be okay.
Again, I want to urge you to work on your emergency fund.
If you don't have an emergency fund, please do me a favor and start working on one today. I get heart-breaking emails daily from families who faced a crisis with no buffer. So please take the time to arm yourself the best you can.
What about you? Have you found yourself in a crisis? What did you do?