Worldwide Success

A fender-bender - what a perfect way to ruin your day.  That precious little piece of metal that you take such good care of suddenly gets smashed.  Ouch!   It hurts.  You blood pressure goes up.  Your face turns red.  How did this happen?  You look for blame.  You run multiple scenarios through your head… what if I had waited a couple of seconds… what if I hadn’t gone to that place… what if… what if…  Dollar bills start flashing in front of your eyes.  You get mad.  You get sad.  Eventually you get over it.

Accidents happen.  It is part of life.  Sometimes it is a little ding on your car door.  Sometimes it involves more serious damage.  Worse yet, sometimes people get hurt.  The only thing you can do is be prepared so that when it happens the impact on your financial condition and overall well-being is minimized.

Carry Insurance

This may seem obvious, but you would be surprised at how many people get involved in car accidents that do not have basic insurance.  It is estimated that about 15% of all motorists in America are uninsured, with some states having much higher rates.  At a minimum, you need to protect yourself against liabilities so that if you damage someone else’s property or inflict injuries on others, you will have enough to cover repairs and medical expenses.  You should also carry insurance protection for yourself, including medical insurance and, if it makes sense, protection for damages to your own car.

Why do I say if it makes sense?  Because if you drive an old car that is not worth much, it does not make sense to carry collision or comprehensive insurance.  If this is the case, carry only liability insurance.  Take the rest of the money that you would have spent on additional coverage and put it in a money market account earning interest instead.  If an accident happens, you will have money to cover it.  If it doesn’t, it’s extra cash in your pocket.

Another money saving tip is to maximize your deductible.  By having a deductible of $500 to $1,000 on your insurance you will save hundreds of dollars in premiums every year.  Again, take the savings from your premiums and put them in a money market account earning interest.  In a few years, you will have saved enough to pay the deductible when needed, and any additional savings are yours to keep.  Many people make the common mistake of paying high premiums so that they will have coverage for every little expense.  That is an inefficient way of managing your insurance needs.  Insurance was meant to pay for large expenses that you could not afford otherwise.  It was not mean to cover small expenses.

Keep Reserves

Another important part of being prepared for when accidents happen is to have reserves.  The last thing you want is to be caught unprepared financially for this eventuality, which will only exacerbate the problem.  Having to borrow money to pay for damages and medical bills is something you should definitely avoid.  Keep a reasonable reserve to at least cover the deductible and any co-payments on your insurance.

Put It Behind You As Quickly As Possible

After the accident happens, the best thing you can do is to put it behind you as soon as possible.  Get you car fixed as soon as you can.  You don’t want to look at your banged up car and be reminded of the accident every time.  Pay for the costs associated with the accident as soon as possible.   Obviously this assumes you have insurance and have some reserves to pay for the damages not covered by insurance.  If you don’t, make that a priority in your financial plan.

Put this behind you in the most expedient way possible so that you can move on with your life.

Be Thankful That It Was Not Worse

It is easy to get caught in emotions when an accident happens.  It is OK to be upset initially, but don’t dwell on it for too long.  If your accident did not involve fatalities or serious injuries, just be thankful for that, and remember that it could have been worse.

What If It Was Serious?

The article “Recovery” from Steve Pavlina talks about effective ways to recover from a serious accident.  How you deal with tragic accidents is a very personal matter.  Faith usually plays a big role in dealing with these types of situations.

Dealing with accidents is not much different than dealing with any other risks.  Risk management is an important discipline in managing a project, a business, an investment, and your personal finances.  Being successful requires managing risks well.  Be prepared so that when an accident happens you can minimize its impact.

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