To bridge the gap between income and expenses, Dana and Julius relied on credit cards and accumulated more than $14,000 on three cards, one of which has an interest rate of 20% and a $6,000 balance. Much of the money has been spent on medicine, household expenses, and helping family members–as much as $9,000 on such emergencies has been doled out. For example, last year they cared for the 7-year-old son of Dana’s cousin, a single mother who had enlisted in the military. They spent $3,000 to fly to El Paso, Texas, to pick up the child and then provided him with food, clothing, and other needs over a six-month period.
The Williamses have no savings account and keep just enough in their checking account to pay bills. Julius and Dana have saved $8,000 and $2,100, respectively, through their 401(k) accounts. “It’s so frustrating that once we get paid there’s nothing left,†says Dana. “It’s been hard on our marriage. We don’t get to go on vacations or do family things. I worry about my son later in life and how we will coordinate what he needs with my mother’s needs,†Dana laments. “I have good days and bad days, but I’m learning to handle this. We’re frugal. We shuffle so things get paid.â€
Adds Julius, who remains upbeat: “I joke a lot with Dana and try to keep the situation light. Laughter is key. I trust that God will guide us in all our decisions. I make sure Dana knows that I will always love and support her through everything. I love her mother dearly. It’s just hard.â€
The Advice
— Establish an emergency fund. The Williamses need to build an emergency fund of $20,000 to cover themselves for at least three months. While Dana and Julius have $125,000 and $150,000, respectively, in term life insurance through their jobs, Johnson advises that they buy a 30-year first-to-die $500,000 term life insurance policy. They should also inquire about whether they can get additional disability insurance and take out as much as their employers will allow. Dana has a benefit of $26,400 annually while Julius has $52,800 per year. The couple should also focus on paying down credit card debt and cut back on spending.
— Seek legal assistance. According to Johnson, because Dana’s mom is in such a deteriorated state, it is unlikely she would qualify for long-termc are insurance. Each state has its own laws, so the Williamses need to find an eldercare attorney to identify benefits for the mother. Johnson suggests that Dana look into a program in Texas called HCBS (Home and Community Based Services; wwwwww.hhccbbss.oorgg) that provides for disabled citizens who are not in a facility. “They need a specialist and should use the $2,000 contest winnings to help pay for a lawyer.â€