How to Make Medical Expenses More Affordable When You're Retired

Medical expenses can be a huge burden for retirees, as well as the rest of the public in our modern for-profit healthcare system. Healthcare costs keep going up, and it's often difficult to afford the treatments and procedures you need. 

However, you can do a few things to make medical expenses more affordable when you're retired. This blog post will discuss the best ways to reduce your medical costs without sacrificing your health or quality of life.

Build Up an Emergency Fund

One of the best ways to make medical expenses more affordable is to have an emergency fund. This will help you cover unexpected medical costs, such as a sudden illness or injury. 

It's a good idea to have at least three to six months' worth of living expenses saved up in an emergency fund. This way, if you have a major medical expense, you won't have to worry about how you will pay for it.

Look Into Medicare and Other Health Insurance Options

If you're retired, you may be eligible for Medicare. Medicare is a government-sponsored health insurance program that provides coverage for seniors and retirees. Other health insurance options are still available if you're not eligible for Medicare.

Many private health insurance companies offer plans for retirees. These plans can be expensive, but they may provide better coverage than Medicare.

Join a Discount Medical Program Organization

A discount medical program organization, or DMPO, is an organization that provides members with discounts on medical services. 

These organizations usually have a network of doctors, hospitals, and pharmacies that offer discounted rates to members. Discount medical program organizations can be a great way to save money on medical expenses.

Some discount medical program organizations charge an annual fee, while others charge a monthly or per-visit fee. Be sure to compare the fees charged by different organizations before you join one.

Consider a Health Savings Account

Another option for making medical expenses more affordable is to open a health savings account (HSA). An HSA allows you to save money for medical expenses on a tax-advantaged basis. This means that you can use the money in your HSA to pay for qualifying medical expenses without paying taxes on the withdrawals.

An HSA offers a triple tax advantage: The money you contribute to your HSA is deductible from your taxable income. The money in your HSA grows tax-deferred. Lastly, withdrawals from your HSA are tax-free as long as they're used to pay for qualifying medical expenses.

Essentially, medical expenses can be a big financial burden for retirees. However, planning ahead and taking advantage of available resources can help make medical expenses more affordable.

10 Ways to Curb Financial Anxiety When You're Stressed About Money

Every individual who is not born into generational wealth has had to worry about money matters at least once in their lifetime. Although money most certainly cannot buy happiness, it can surely hold the key to fulfillment. 

The living standards of a person are directly dependent on their financial freedom.

Whether you want to purchase a pack of cereal or pay fees for your university, monetary freedom is the real deal-breaker, especially when it comes to practical situations. 

But managing finances is no easy task. It is kind of like an escape room game where you solve one puzzle only to be led to the next one. There are so many pieces to put together that most of us end up losing patience midway.

What Causes Financial Anxiety?

Given the role money plays in determining our life's course, it is normal to experience anxiety when thinking about finances. Undeniably, not everyone is born with a high skill set for managing money and numbers. 

How many people do you know that can manage their finances like a pro? Probably not even a handful. Well, it is only natural because we are all humans, we are bound to make mistakes.

In order to avoid repeating these mistakes, we often try to curate a foolproof plan. Unfortunately for our brain, all this groundwork leads to excessive overthinking. Therefore, people fall headfirst into the never-ending loop of anxiety and panic. 

Well, if you are concerned about managing the finances correctly, don't worry because you have come to exactly the right page. This article will lay out in detail 10 ways to curb financial anxieties with utmost ease.

Focus on what you have

The human brain is notorious for time traveling. In situations like this, you need to take a step back and calm down your multitude of thoughts. As you take shorter and deeper breaths, try to think of all the positives that you have on your plate right now. 

Surely, there must be something going in your favor. You can write down the positive impact of some common practices in your life. This practice can help you gain back some sense of control and stay grounded in reality.

Practice Budgeting

Budgeting is a very good way to keep your anxieties at bay. It allows you to have an overview of your regular expenses and tweak certain spending areas to keep up with your financial stability. 

Analyzing how your finances by having a look on the paper is often a great place to start from. When you decide to analyze your expenditure and track down the money flow, it becomes a lot easier to figure out the problematic areas. 

Once you can pinpoint the core problems, you will be able to function and tackle the situation with strategic planning.

Do not carry any guilt

Do not feel embarrassed over your past mistakes. Overanalyzing how you miss managed your finances that one time in the past is something that can start the cycle of anxious over-thinking. 

Therefore, it is important not to feel guilty or ashamed of your past mistakes. Furthermore, understanding your flaws and working towards achieving a better goal is what makes you a better individual. 

You should not feel embarrassed or upset about talking about your monetary situation openly. Feel free to talk it out with your loved ones.

Seek professional advice

Financial advisors can be exceptionally helpful when it comes to dealing with your finances as well as anxiety. Professionals know their ways to navigate you through a tough situation. This is why a majority of individuals have started opting for external assistance. 

The best part about this is that they can easily guide you and help you achieve your desired goals, be it saving up for your future or discussing some investment strategies.

It's time to set up an Emergency Fund

Given that our mind processes millions of bits of information every single second, the idea of future emergencies and losses can most definitely be parallelizing. 

Undeniably, it is the fear of the unknown that results in severe panic attacks because you feel like nothing is going the way you had planned. This is why setting up an emergency fund is your best bet. 

Sparing out some cash dedicated only for some tragic emergency will help you ease your anxiety. This will give you sensitive assurance and a safe space to fall back to.

Quit comparing

The grass is always greener on the other side. If you start comparing yourself to others, you will start to feel that you are not where you're supposed to be. 

All your efforts would start to feel inadequate and your life - miserable. Therefore, we advise you to stop comparing yourself, especially on the plethora of social media platforms. It is extremely easy for anyone to get fooled by the virtual image of other individuals. 

However, it is important to keep in mind that people only portray their best version of themselves. You need to understand that your journey is different from your friend, cousin, or neighbors.

Face your fears

This can be one of the most difficult steps so far. This is so because understanding your fears can be a triggering process. You might invoke deeply embedded emotions that can be extremely hard to dissect. 

However, awareness is the first step towards stability. Once you deal with the difficult task, you will have the freedom to curate a strategic plan that will help you gain a sense of control. Moreover, you will have a plan when your worst fears come to life.

Education is the key

Human beings often have this overpowering fear of the unknown. This causes a lot of chaos and turbulence within an individual. 

People at times succumb to confusion and this disorientation in their life. So, when it comes to monetary problems, you can start by educating yourself on various methods. 

By doing so, you will gain valuable amounts of knowledge and will be able to formulate a reliable plan for upcoming situations.

Have a discussion

Sometimes, it's good to talk to your partner. Especially if your partner is also involved in your monetary and financial decisions, having a clear and open discussion about your worries and thoughts can be an empowering experience. 

You will feel more seen and heard as you will realize that your partner experiences similar struggles. Secondly, you will have a sense of awareness that will help you create a reliable plan. 

A discussion will not only provide you with a better sense of clarity, but it will also give you the ease of mind.

It's okay to worry sometimes

If you decide to quit having any type of concern, you will eventually end up in trouble. While it is certainly not advised to overthink dramatic events, it is a good idea to show some concern as this will keep you aware and updated on your surroundings. 

You will be able to figure out your spending style. Doing the desired reflection and analysis on your spending strategy will help you refrain from making any poor monetary decisions.

Conclusion

Before getting into this, please note that if you feel that your anxiety gets out of control sometimes and is affecting your life in serious ways, please consider going to a professional. 

Having panic attacks and anxious thoughts for a prolonged period clearly indicates that something is not right. Ignoring all the cues will simply take a toll on your mental and physical well-being. In this situation, any type of external guided help can be extremely reliable. We do not encourage self-diagnosis. 

With that being said, in this article, we discussed some simple yet reliable tips and tricks that can surely assist you in managing your finances.

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Plagiarism Check:

 

5 Water Heater Problems You Need to Watch Out For

Whether your water heater features a tank or is a tankless model, keeping it in functional shape is critical to its function. When your water heater runs into issues, you may not get the exact level of temperature control you need, which can be particularly frustrating during the colder winter months. 

Keep an eye out for these problems that may indicate you need water heater repair.

No Warm Water

The surest sign of an issue with your water heater is a lack of warm water. When you notice that your system is not producing hot water for your day-to-day needs, you may need to get repairs done. Any number of issues may cause it, ranging from the mechanical to the electrical.

Low Water Pressure

Your water pressure dropping may also indicate an issue. Because your water pressure is also tied to your main water line, the issue may extend outside of your water heater. 

Speaking to a certified professional can help you narrow down the specifics and determine what course of action will best restore function to your water heater.

Discolored Water

Like low water pressure, the appearance of discolored water may indicate something wrong with the water system at large. Though the problem may be localized to your water heater, older pipes and fixtures may also result in discoloration. 

A thorough diagnostic approach will help determine what parts of your water heater will need repair or replacement.

Strange Sounds

Another certain sign of wear and tear to your system is the presence of strange sounds. Your system should be running quietly or silently. Any grinding, whirring, or buzzing sounds may indicate the appearance of damage. 

This is particularly apparent in older systems, where these sounds may appear after years of use. Often, when a system is old enough, repairs are no longer possible, and entire replacements may be necessary.

Temperature Takes Too Long to Change

Sometimes the issue may not manifest in a particularly overt way. The slightest changes to your temperature can be enough to indicate an issue. Water that takes too long to get hot or cold may be a sign of your system not functioning as it needs to be. Speak to a professional as soon as possible to prevent small problems from getting worse.

Preventative maintenance goes a long way in extending the life of your unit. Always take the time to run a regular diagnostic check on your heating system once every three or four months, and call an expert when something is out of the ordinary.

How to Budget for Insurance and Other Needed Items

As you get older, you need to budget for a number of different types of expenses each month. Insurance is one of the most important types of expenses that can reduce your risk of significant loss if accidents or injuries occur. 

There are a few tips to follow to get started if you want to know how to budget for insurance and other needed items.

Use a Spreadsheet

Use a spreadsheet to itemize your different insurance costs each month to ensure you can calculate the total cost. Write down the date that you’ll need to make the payment each month to ensure you can avoid late payments. 

If you’re not sure of the cost of your policy, contact the insurance company or review your previous statements to know how much to budget for in the coming months. 

After you obtain an insurance quote and get a policy, set up automated payments to avoid late payments and make it easier to maintain your budget.

Create a Separate Savings Account

Setting up a separate savings account can allow you to have a place to store extra money to pay for your insurance and other needed items when you get paid. 

This can prevent you from spending money on splurges or unnecessary purchases. Calculate how much money you need to set aside each paycheck to ensure you can afford the payment.




Setting up an automatic savings plan will also make it easier to automatically put the money aside to develop more discipline with maintaining your budget.

Save an Emergency Fund

Save at least $1,000 for an emergency fund, which you can use to put towards unexpected bills that you’re charged for each month. This can include last-minute car repairs or even a trip to the emergency room. 

With the extra money available, it’ll help you to avoid stress and debt when your budget fluctuates and changes at times.

Use Cash

Setting aside cash and placing it in different envelopes for some of your expenses each month can allow you to become more organized and have self-control. Use the gas for fuel, groceries, and dining out to stay within your budget and avoid overspending.

Learning how to budget for insurance and other needs will make it easier to have a system in place and have more control of your finances. You can avoid overspending and have the necessary funds to keep your insurance policies.

4 Emergencies to Budget for with Your Family

An emergency can happen to any family at any time. Some family emergencies can be expensive to manage, and you can prevent a lot of stress and financial trouble if you are able to budget ahead and establish an emergency fund. 

Here are four types of emergencies to budget for with your family.

Loss of Job

Loss of a job is a big financial emergency. The COVID-19 pandemic has resulted in more than 22 million Americans losing their jobs as of April 2020. Unemployment takes a while to kick in, and not everyone qualifies for this compensation. Consider having six months' worth of living expenses saved in case of a job loss.

Car Breakdown or Accident

Most people need a car to get to work. If your car breaks down, not only could you find yourself out of a job, but you also have to come up with the money to arrange for an unexpected car repair. According to Legacy Auto, a provider of car repair services in Boulder, CO, it is a good idea to have a maintenance and repairs fund for your car. 



As cars get older, they are more likely to need pricey repairs, such as new brakes. If you are in a car accident, you could also be subject to a deductible before your coverage kicks in. Consider budgeting so that you have at least the amount of your deductible available for a car emergency.

Medical Emergency

Medical emergencies are one of the most common reasons why people go into debt. Many people have high-deductible insurance plans that only kick in when they reach a large out-of-pocket threshold, such as $10,000 or even more. Even if you do not have a high-deductible plan, a medical emergency can still be catastrophic to your finances. 

If possible, the budget for your out-of-pocket maximum expenses. You could have this money in a tax-free FSA or HSA. Some of these plans allow you to roll over the funds you do not use in a given calendar year.

Major Household Repairs

Major household repairs can take a big bite out of your bank account. If your furnace or heat pump suddenly fails, you could be looking at a $3,000 to $6,000 replacement cost. A sewer line failure or burst water pipe could cost thousands of dollars to repair. 

A sudden crack in your home's foundation might necessitate extensive repair work costing tens of thousands of dollars. Masonry and electrical repairs are also essential and expensive. If your home needs a new roof, you could be looking at a $5,000 or more expensive. 



A failure of your refrigerator or oven could also be pricey to handle. Several websites list the average lifespan of different parts of your home and home appliances, and you can use that information to plan when they will need to be replaced. 

Some emergencies might be partly covered by your homeowner's insurance, such as a hailstorm that damages your roof. However, you will need to have the cash on hand for the deductible. Insurance companies also factor depreciation when compensating you for covered losses.

Other Minor Emergencies to Consider

Above are four major emergencies that you should budget for as a family. However, a series of minor emergencies could also have a considerable impact on your budget, explains U.S. News and World Report. 

If you had to take an emergency trip out-of-town for a funeral, travel, and lodging could be pricey. A sudden move can also be expensive. Perhaps your landlord decided to sell the house you're renting, or maybe your job decided to relocate you to another city. Maybe you have to take in a niece or nephew, grandchild, or parent. 

The cost of living increases can also impact your finances, especially if your health insurance or car insurance premiums, rent, or utility costs go up without a corresponding increase in your paycheck. You also need to have a budget and plan in place for these situations.

These are not the only emergencies that could impact your household, but they are common. It is wise to expect the unexpected and have a plan in place for anything that might happen. Planning and budgeting give you some peace of mind that you can weather an emergency without having to go into a lot of debt.

4 Unexpected Home Mishaps You Need to Be Financially Prepared For

If there’s one thing that’s true about owning a home, it’s that you can be sure that unexpected events will occur at some point that will negatively impact your home. While most of these events are fairly minor and are fairly easy to recover from, there are plenty of major home mishaps that can cause major damage and are quite expensive to fix.

The best thing you can do to prepare for these mishaps, beyond knowing what they are, is to have the financial means to recover from them should they occur. To help you prepare your budget and your mind for the future, here are four unexpected home mishaps you need to be financially prepared for.

Broken HVAC System

Though it hums along largely unnoticed, your HVAC system is one of the single-most expensive items in your home. Therefore, if your system fails, you’ve got a major expense on your hands. Typically, to purchase a new HVAC system and have it installed will cost you several thousands of dollars, an amount which most people don’t have just hidden in their couch cushions.

The biggest problem with a faulty HVAC system, of course, is that it can quickly lead to an uncomfortable home. To ensure your long-term comfort, then, it’s best to save up to be able to replace your HVAC system if it fails.

Flooded Basement

Leaks in your basement, both large and small, are no laughing matter. Even small leaks can lead to the growth of mold and mildew that can cause serious respiratory issues for your family.



Even worse is if a large backup occurs due to a broken sump pump or a major flood. This type of sudden damage can require the replacement of just about everything in your basement. To help protect against this issue, heavy-duty basement waterproofing is a great investment to make.

Damaged Roof

In many cases, a roof replacement will be something you’re able to prepare for slowly, allowing you to save money over time. However, if there is a major storm in your area, you could find yourself with an urgent need to replace your roof due to storm damage.

In some cases, your homeowner’s insurance will cover the cost of a new roof. If it doesn’t provide coverage for some reason, though, you’ll be on the hook for several thousands of dollars in repairs.

Electrical Fire

If your home has faulty wiring, you’re constantly putting yourself at risk of an electrical fire. Though many electrical fires can be caught in time to put them out, they certainly have the potential to get out of control and cause significant damage to your home.

Even small fires can cause expensive damage depending on where they occur. That’s why it’s crucial to have an electrician inspect your home’s wiring to ensure it is safe and up-to-code.

Saving doesn’t seem that important until you’re in need of a sudden cash infusion. When those times come, you can only wish that you had had the wisdom to save money when you had the chance.

That’s why it’s important to make saving a part of your lifestyle, challenging yourself to find as many ways as possible to save money while still maintaining your desired quality of life. While it’s a tough balance to strike, it’s worth it when you face an unexpected home mishap.

Which Emergencies Should You Save for in Your Retirement?

Even if you have saved up quite a bit for your retirement, you might still run into a few emergencies that put your finances in jeopardy. That is why everyone who is nearing their retirement should spend some time putting money away for a few expensive situations that could pop up in the coming years.

Household Repairs

Carrying out preventative maintenance should keep your household appliances running smoothly for years, but there will come a point when some of those devices need to be repaired or replaced entirely. 

You must also be ready to replace your HVAC system if it is more than 10 or 15 years old. Replacing an HVAC unit can be a huge investment, and your home insurance probably won’t cover a new condenser or the installation fees.

Unexpected Travel

You should be able to plan most of your trips months in advance, but emergencies can happen at any time. If a family member becomes ill and you would like to see them right away, your ticket is going to be quite expensive. 

You don’t need to save up tens of thousands of dollars for unexpected travel, but you should have enough to cover one or two flights and a few nights in a motel room.

Long-Term Illness

Long-term illnesses are extremely common among the elderly, and most basic insurance policies won’t cover those health problems. At the very least, your emergency fund needs to be large enough to help you deal with a medical emergency that lasts for a few weeks. 

That will give you plenty of time to contact your insurance provider and file a claim. You should also consider upgrading your insurance policy if you have a family history of chronic illnesses.

Auto Accident

A serious auto accident can happen in the blink of an eye, and one of those collisions could wipe out your savings if you aren’t careful. Your auto insurance policy should help you after most accidents, but major collisions can be very expensive. 

If you aren’t fairly compensated after an accident, then you need to contact a personal injury lawyer to explore all of your legal options. You might need to take the other driver to court if they are under-insured or completely uninsured.

For many of these situations, a world-class insurance policy is going to be your first line of defense. A solid policy will cover a wide variety of expenses following an accident, injury, or illness.

3 Benefits of Starting a Personal Medical Emergency Fund

When something happens to us, the world doesn’t stop. This is especially true when it comes to bills. Many people today are starting a personal medical emergency fund to cover unexpected medical emergencies that accumulate major bills or prevent them from working. Here are 3 reasons that you should consider a personal medical emergency fund, too.

Health Insurance Doesn’t Cover Everything

Even if you have health insurance, it can’t cover all unexpected expenses that might occur because of an accident. Many times, dental procedures, weight loss procedures, and alternative treatments are not covered. When something is covered, you may still have to cover a percentage of the cost. 

Many prescriptions aren’t covered, either. An emergency medical fund gives you money to cover the things that aren’t covered by insurance. For people without insurance, an emergency fund is absolutely necessary in the event that they get sick or injured.

Attorney Fees

When you get into an accident, you may have to hire an attorney. An attorney is helpful if you got into a car accident, get injured at work, fall at an establishment, and a number of other reasons. While insurance companies claim to work for you, they are really trying to pay out the least amount possible. 




A personal injury attorney can help you get the settlement that you deserve. They can also listen to your case and tell you whether you should move forward or not. Your medical emergency fund can help pay for the personal injury attorney services.

Medical Emergencies Are Unexpected

If you want to buy a car, you can plan for it. You can save a certain amount of every paycheck until you’re ready to make your purchase. Unfortunately, you can’t plan for an injury or an illness. 

When it happens, you get the bills whether you are ready or not. If you have an emergency medical fund, you will be more prepared when the unexpected happens. This will prevent the bill collector phones calls, which is the last thing you need when you’re recovering.

Going through an illness or injury his bad enough as it is. It gets significantly worse when you see how much it is going to cost you. Make it easier on yourself by planning ahead and building up a personal medical emergency fund. You can use it to cover your medical bills, personal bills, and give yourself a piece of mind after a tragedy.

How Spry Seniors Financially Protect Themselves

In order to financially protect yourself, you need to take steps to understand your current financial situation. You’ll also need to set goals about the things that you want to be able to do with your life. 

Here are some of the methods that you can use in order to financially protect yourself and safeguard your future.

Determine Your Means

You have to understand where your money is going in order to take control of it. Keeping tabs on your monthly expenses is the first place to start. Determine your assets and examine your debt load. 

Ask yourself what it would take to decrease or eliminate your debt and how that would impact your life. Learning to live within your means now will ensure that you have a better chance of doing so after you retire.

Plan for the Future

Create a long-term plan for your future so that you can live your life to the fullest. Use professional financial planners to help you plan for your retirement. This will help you to set long-term as well as short-term goals. 



A part of being financially independent is making your money work for you instead of you having to work for your money. This is sometimes referred to as lifestyle planning so that you can set the goals that are important to you.

Have a Contingency Plan

Create a fund for emergency purposes and other types of unforeseen events. This may include you getting life insurance or having a long-term care plan in place. Many health insurance companies offer this type of insurance so that you won’t get stuck with having to pay for these expenses out of your own pocket. 

Unexpected medical bills could derail your ability to retire and retain your financial stability throughout your life.

Balance Your Budget

Balancing your expenses with your income is the first place to start when it comes to balancing your budget. The second step is to have more money coming in than is going out. This strategy will allow you to set extra aside other than what you’re currently putting away for retirement. 

Medicare can be a big help, but it doesn't cover long term stays in memory care or assisted living facilities. Unexpected medical bills could derail your ability to retire and retain your financial stability throughout your life.

Once you decide to retire, you won’t have a steady income flow and will be relying on your retirement savings. Beef it up so that you can handle whatever life has to throw at you.

Protecting yourself financially can sometimes mean that you need a little bit of help to achieve your goals. Use these tips so that you can be ready for a future of being financially secure.

How to Use an HECM Line of Credit as an Emergency Fund

Many seniors turn to a Home Equity Conversion Mortgage (HECM), or reverse mortgage, only when their nest egg is depleted and they are struggling to cover their living expenses. Instead, it may be in your best interest to establish a HECM line of credit as soon as you are eligible so it is available when — and only when — an emergency expense arises.

The best strategy for using an HECM line of credit is not as a last resort, but rather as a well-planned, tax-free emergency fund of sorts. Setting a plan in motion now to handle unexpected financial needs in your future may help you avoid a crisis down the road. 

In other words, you need to planning for how to access the equity you have in your home before you truly need it.

Read on to learn more about HECM lines of credit, how you can use them, and how they could help you cope with any surprises during your retirement years.

What Is the HECM Program?

The HECM program was established as part of the Housing and Community Development Act of 1987, and is federally regulated and insured by FHA. It allows homeowners to convert a large portion of the value of their homes into cash that is typically tax-free, while retaining ownership of their home. 

The homeowner does not incur a new mortgage payment; their only obligation is to live in the house and pay for its property taxes and homeowner’s insurance. Of course, it is worth consulting a certified public accountant to review the details of your specific situation.

The term "reverse mortgage" is often applied to an HECM because it works in the reverse way of a traditional mortgage. Instead of the homeowner making a monthly mortgage payment, the bank gives money to the homeowner. 

This money can be delivered as a line of credit to be used as needed, a lump sum, equal monthly payments, or a combination of these options. We’re going to focus largely on the line of credit option, because it is the option best-suited for use as an emergency-fund-in-waiting.

Unlike a loan or other traditional lines of credit, the money that is used from the HECM line of credit does not have to be paid back as long as the homeowner lives in the house. Instead, the amount used is covered by the eventual sale of the property when the homeowner moves into a new home or passes away. 

The home is the only asset involved and it is a non-recourse loan secured by the FHA, no debt related to the HECM is taken on by the homeowner’s spouse or heirs.

When Can You Get an HECM?

Making the most of an HECM is all about timing. All too often, seniors on a fixed income find themselves unable to keep up with their expenses when they face unexpected financial demands. 

If you wait until this kind of situation arises to take out an HECM line of credit, the amount of money available right away may be limited, and the initial fees associated with setting up the line of credit would further deplete the funds. But you can make the HECM work for you by setting it up well before a financial emergency takes place. 

Under the terms of a HECM line of credit, the available balance will gradually increase over time as interest compounds, which means it is in your best future interest to let the line of credit sit untouched for as long as it is unneeded.

Read More: Reverse Mortgage Guide

You become eligible to take out an HECM as soon as you turn 62 years old. Should you choose line of credit option, this is usually the ideal time to do so, because you are either still working or have only recently retired, so you may not yet have felt the strain of a fixed income. 

Since you may not need to use any of your available line of credit at this time, you have the option to leave it alone and let the available balance increase. Ultimately, more money in the account means more growth as time passes, due to the compounding interest on a HECM line of credit.

For this strategy to work, it is very important that you have the discipline not to draw from the money for small or unnecessary expenses. 

If you are planning to preserve your HECM line of credit as an emergency option, we trust that you are more financially responsible than most. Use the money only when you absolutely need to cover an essential expense and cannot do so any other way. You should consider it an emergency fund.

How Does Your HECM Change Over Time?

Viewing your HECM line of credit as an emergency fund means you do not plan to rely on it as a primary source of income when you retire. It is separate from your retirement savings and investments. If you start it at age 62, it will accrue value over the years until you need to draw from it.

The program is designed so that the principal amount grows over time, and the growth rate is accelerated if interest rates and inflation rise. If you use it wisely, your HECM line of credit could surpass the value of your home with enough time.

It’s important to remember that this is only the case as long as you are living in the house on which you took out the reverse mortgage. 

When Do You Use Your HECM Line of Credit?

Eventually, you will likely have a pressing need to take advantage of your reverse mortgage. You may need to make sudden household repairs, which can get expensive very quickly. 

You will likely find that your medical expenses grow over time, and medications, surgeries, ongoing treatments, or home health equipment are not always covered by Medicare or Medicaid. Other financial emergencies could arise from a change in income, or the death of your spouse or another beloved family member.

On the happier side, you may want to have a source of extra funds for special occasions. Perhaps you want to take a vacation or attend a loved one’s destination wedding. 

You deserve to relax during your retirement without worrying about depriving yourself just to cover basic living expenses. Your years as a responsible homeowner should work in your favor at this time.

Is an emergency fund already part of your financial management plans? Look into your options today to avoid any costly scares in the future. Consulting a certified reverse mortgage professional may help you determine what will work best for your individual situation so you can enjoy your retirement to the fullest.


Contributed by: Mehran Aram, a graduate from the University of San Diego School of Business in 1984, founded Aramco Mortgage in 1998 after spending almost five years in the industry. Today, Mehran Aram is President and CEO of The Aramco Group, and has recently been honored with the distinction of CRMP(Certified Reverse Mortgage Professional) a certification held by less than 50 brokers nationwide. Mr. Aram currently heralds the title of “Mortgage Analyst” on San Diego radio stations: AM 600 KOGO, AM 760 KFMB, AM 1170 KCBQ, AM 1210 KPRZ, FM 98.1, and Fox News Monterey’s AM 1460. Garnering endorsements across the state of California, including from radio personalities, Roger Hedgecock, George Chamberlin, Mark Larson, and Ladona Harvey, Mehran Aram along with his nearly 20 years of industry experience has effectively become California’s Mortgage Expert in reverse mortgages, refinances and purchase loans, among many other loan products.

Emergency Fund and Why It Is Necessary

Keep saving, for who knows when the thick, sturdy and long trunk may be filled. Sometimes, the bright shining sun on a beautiful spring day may hide behind the scary black clouds to pour out thunder. 

Life is never as we see it, even Steve Jobs had to face a stressful public failure, although he was a millionaire by then, but money is never constant, it keeps flowing away like a gushing river. 

Saving up for an emergency is the best way to cope up in times when an excess amount of money is immediately needed.

An emergency fund stored up beforehand can prevent people from untimely issues like that of health, failure or even poverty; saving money may seem difficult in the beginning, cutting luxuries to save up, but the result of hard work and patience is always fruitful. 

Even if the emergency fund isn’t too big in amount, it’ll always help in reducing the amount of money. Some Americans reportedly tell that during the great depression in the 1930s, their saved up emergency funds helped them eat at least once a day for some time. 

Types of emergency funds

● Short termed

This type of emergency fund is usually for smaller emergencies like house repair, car repair, failure of a costly appliance, health emergency and much more. 

These should be in accessible accounts which usually bear little interest. Accessibility is the most important thing- since usage of a debit card or check writing is a must.

● Long term

These are for big scale emergencies like- earthquake, fire, unemployment, immediate purchase of some costly but necessary thing. 

These also need to be accessible but keeping them safe in an account that takes days to liquidate works fine, till the short termed emergency fund is well saved up. These have an increased level of interest.

Always remember an emergency fund should always be quickly accessible and easily liquidate (converted into cash) and should be kept at – no risk. 

Benefits of having emergency fund

● Stress free

Life without a ‘financial safety net’ is a life on ‘financial edge’ hoping to pass by without bumping into an emergency; it intimidates the financial stability and well- being of a person. 

Being well prepared for any kind of financial menace can make a person lead a successful and confident life. Stress is the cause of serious health issues; better keep away from it and start saving up for stability. 

● No unwise whims or fantasies

Have a separate account for the emergency fund; it’s the best way to store up funds. The more out of sight it is the more out of mind it will be, if it’s as close as on the debit card, it won’t be your fault but your four-five digit saved up money will lure you into buying a dress or the latest gadget. By keeping it in a separate account, you’ll know how much you’ve saved up and how much more you need to save.

● Away from bad financial decisions

It will keep you away from bad financial decisions; you’ll always have this thought stored up for the fund to be saved. All decisions will be risk-proofed when a goal of saving up stands ahead. 

Digits of the fund and why so much

According to financial experts, saving up to six to eight months worth of expenses is always the best. It’s painful to cut off luxuries which we treat ourselves with, or pamper our souls with new clothes and food. 

But these funds can help in times of serious trouble. Corporate jobs are always risky and demanding, unemployment can stand up unexpectedly with no warning bells. Taking the unstable economy in hand, a saved up fund of about 3 months expense doesn’t come to even close enough of being an aid during the emergency. 

Time takes a different toll when saving up for retirement; six month’s expense will look too puny. A saved up $14583 for funds will look like a small twig.

Building the emergency fund

The most disheartening aspect of saving up for an emergency fund is the contribution of a large amount of money. Saving $6000 per month seems out of reach for some people. 

But there is no need to pay everything at once; an emergency fund can be built up little by little with time.

Building the fund

First, make a well-schemed list of the expenses per month.

Food	$5233.71
Transportation (no car)	$225.4
Utilities	$201.76
Sports and leisure	$275.44
Child care	$2328.77
Clothing and shoes	$ 504.72
Rent (approx)	$1942.22

If the pocket is short, then some expenses can be shortened or cut. Cutting basic expenses is very difficult, but slowly with time, some improvements can be made. 

If you start saving up for six months, the total amount will cost approx $27000 which may increase with interests. 

Months	Cumulative expenses
1st  month	$ 4,658.98
2nd month	$ 9,317.96
3rd month	$ 13,976.94
4th month	$ 18,635.92
5th month	$ 23,294.9
6th month	$ 27,953.88

Daily expenses may vary from state and city wise, moreover the monthly income of a person and the people living in the house matter. 

Break it down

First, determine and make a monthly expense chart, then decide the figure of the fund needed as per the money left from the monthly income. 

Determine the time it will take to reach the goal based on monthly savings, breaking it down will help in keeping up with this goal as well as targeting for other things too. 

Wasted money

A family usually wastes its money up to 10% per month. Over usage of electrical appliances, electricity, ordering food etc can be stacked and used wisely. This money, be it little in comparison can be used up for the emergency fund.

Automatic payment

Automatic or direct payment from the checking account to the emergency fund is a good method of payment. Forgetting will not be a problem, and since it will be done by the bank the person will not worry about it for longer and will try to adjust to the changes.

Dividend earnings

Padding the account with dividend earnings is also a good method, dividend accounts are not meant for just investing the income they can also be padded up for the emergency funds.

With pain comes success, a saved up emergency fund will bring pride and assurance.

Peter Christopher is the personal finance blogger at Finance Care Guide and a guest columnist for many blogs that deals with providing practical solutions to different financial issues. Visit him on Google Plus and Twitter.