In September 2013, Chris Collins purchased health insurance.
Three months later, he was diagnosed with thyroid cancer.
Collins, a single 55-year-old in Houston, Texas, is self-employed at his personal training business Collins Innovative Personal Training.
Before September, he had been operating for a few months without insurance, but says, “I knew it was the right thing to do, and I just made the decision to do it. If you don’t have health insurance, you are one diagnosis away from financial ruin.”
Amidst a flurry of tests, hospital visits, and surgeries, Collins realised his new coverage — a catastrophic plan with a $US10,000 deductible — wasn’t holding up.
Soon, he had racked up $US130,000 of medical debt.
“When I was seeing the doctors, I discovered that this policy wasn’t doing me a lot of good,” Collins explains. “So I decided to look into obtaining a better policy through the marketplace — Obamacare. Long story short, I was able to find amazing insurance through Blue Cross Blue Shield of Texas, which has saved me from financial ruin. I was able to get a policy with a premium of $US496 per month, which has been a godsend.”
Collins’ treatments were successful and today he is free of cancer, and free of medical debt — his new insurance policy was able to eliminate nearly all of that $US130,000.
Here, Collins shares his average spending for 2014, as he paid follow-up medical costs. Note that these are averages taken from a year’s worth of spending, so a single month isn’t represented. His average before-tax income was $US4,134.
Being self-employed, he works with an accountant to determine that he should pay taxes in four quarterly increments of $US1,000 each, but due to medical costs was unable to make the full payments in 2014. He hopes these same medical costs will decrease his tax bill.
It’s also worth noting that Collins doesn’t budget in the traditional sense of the word, planning out his expenditures for the next month. Instead, he mostly uses a spreadsheet that was created in Excel, but which he prefers to print and fill out by hand, to log his purchases. He says that so far, his method has kept him in the black.
The “healthcare” category includes his insurance, doctor’s visits, dentist visits, prescriptions, and even parking at the hospital, for which Collins has paid as much as $US30 a month. The “car” category includes insurance and maintenance. “Miscellaneous” covers everything from clothes to haircuts.
Collins keeps a separate checking account and credit card for his business, to cover everything from facility fees at the gym where he trains his clients to polo shirts with his logo. In terms of his spending and budget, he categorizes those business expenses in his personal budget as “training business.”
Aside from his unpredictable medical costs, Collins finds the trickiest category of his budget to be “vacations.” “As a self-employed personal trainer, when I’m on vacation I’m not only spending money, but also not adding to the bottom line. That’s the challenge of being self-employed,” he says.
One conspicuously absent category from his budget is savings. Collins has a $US16,000 emergency fund, plus about $US50,000 of retirement savings in an IRA. In 2014, he wasn’t able to contribute. “I did not do a good job of saving for retirement in 2014 and hope to do a better job of that in 2015,” he says. “I am 55 years old and am very concerned about my ability to ever be able to retire. Fortunately, I enjoy my job and figure I will be doing it for at least another 20 years.”
Collins also has a $US7,000 auto loan, which is his only existing debt. “Of course I could pay off the auto loan with the emergency money,” he explains, “but I’m choosing not to at this point to have the cash available.”
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