Announcer: We promise we are not a bunch of stuffy old lawyers saying stuffy old things. You heard that right, this is the Inside to Injury Podcast, sponsored by Osterbind Law PLLC. The podcast that reports to you, central Virginia, about what's going on in the injury and disability world. We answer all the questions you don't even know to ask. Now, here's your host, Brandon Osterbind. Let's get started.
Brandon Osterbind: Welcome back to the Insight to Injury Podcast. This is Brandon Osterbind your host and thank you so much for joining us today. Before we get started, I feel like I owe you all an explanation. It is, as I sit here today, July 1st, and it has been over a month since I've published a podcast.
Brandon Osterbind: I thought that I owed you guys an explanation. I got through the first six episodes of our podcast and I felt like it was going really well, I was getting some momentum and then all of a sudden that just kind of stopped. I had to take a break from publishing podcasts and there's kind of a myriad of reasons why that happened.
Brandon Osterbind: I don't want to get too much into the details of my personal life, but at the same time, I will explain why there was a temporary hiatus in our podcast publishing. I hope that you will understand, and I hope that you will forgive me for taking the break and coming back as I have done.
Brandon Osterbind: The first thing that really shook my world and the world of my family, was a passing of a loved one, a very, very close, loved one. That took a pretty deep toll on me, and on my family, and on my time and on my availability to sit down and record podcasts. Not just my availability, but my mental capacity to sit down and record a podcast. Quite frankly, for a couple of weeks there, I had no mental capacity. No emotional capacity to sit down and let my thoughts flow freely from my mouth into this microphone. I hope that you would understand that.
Brandon Osterbind: Then after a couple of weeks of just deep emotional trauma, started to come out of that a little bit. Then we went on vacation for two weeks and we just got back from vacation. We had a lot of time to sit and reflect and grieve and just think and put things in the context and perspective and the grand scheme of things. Just consider everything about our lives and come back kind of refreshed and renewed and with a new vigor to keep going in this thing that we call life. Even though we have struggles, and we have trials, and we have temptations, there is always a reason to keep going.
Brandon Osterbind: There is always something to look forward to. There is always someone to help. There is always information that we can provide. There is always resources that we can give. There's always a shoulder that we can lend to our neighbors when they need them. I hope that you will forgive me for not publishing our podcast as frequently as I promised. Sometimes life throws us curve balls, and we have to deal with those curve balls in the best way that we know how and the best way that I knew how was to just stop, and to just rest, and to just think, and ponder, and grieve and recover.
Brandon Osterbind: That's hard and I'm not there yet, but we are back at the office. We are back into the full swing of things and we are trying our best to keep moving forward. We will keep moving forward because life keeps moving forward and God still has things planned for us and for things that we need to do, and for the people that we need to help. We need to be faithful.
Brandon Osterbind: If there's one thing that you learn from reading the Bible and from life experience itself, is that we need to be faithful in everything that we have been given. We have an obligation to be stewards, to be managers of our time, of our resources, of our capacity. We have to be good managers of those things and part of being good managers of those things I think, is taking time off. Taking time away to recharge and regroup and come back with a stronger vision. With a stronger mission to pursue justice and then help people achieve good results. Not just with their case, but in their lives.
Brandon Osterbind: That's really what this episode is about. I want you to achieve success in your life. Today I want to talk about, as you can see from the title, How to Handle Your Money After You Win Your Case. What most people don't know is that Kelly and I actually are master financial coaches. We have been trained by the team down at Ramsey Solutions in Nashville, Tennessee.
Brandon Osterbind: We had the unique experience of going to Nashville about three years ago and sitting for several days under the tutelage of Chris Hogan. Who if you've ever heard speak is an amazing speaker. He has a podcast. He has written books. He's written books like Retire Inspired. He wrote a book called Everyday Millionaires, which I just read over vacation. Both of them are excellent books, excellent resources that I would recommend to everybody, but what most people don't know about Chris is that he started out working at Ramsey Solutions as a financial coach for mostly high net worth individuals.
Brandon Osterbind: He also coached individuals who are what he would call everyday millionaires. It's the normal person that you see down the street in an average house, who drives an average car, who works in an average job, but you would never know that they are in fact millionaires. His last book was a study of 10,000 millionaires and the vast majority of them are everyday millionaires. He's got all the statistics in the book and I won't regurgitate them here for you today, but I think that ought to be not a goal for the sake of being a millionaire.
Brandon Osterbind: I think there's a good deal of vanity involved in that, but for the sake of providing for your family, for not being a burden on your children in the future, for making sure that you can live your dreams in retirement. Chris always says, "That retirement is not a number, it's not an age, it's a number." Once you hit that number, it doesn't matter if you're 45, 55, 65 or 75, whatever that number is when you hit it, that's when you can retire. It's not an age, it's a number. Focus on that number and ultimately you'll get there.
Brandon Osterbind: One of the things that I want to talk about that's particular to our field of legal practice is how to handle your money after you win your case. The first thing that I'm going to recommend to you is a book by Dave Ramsey, who Kelly and I have been following for six, seven years in great detail and with great rigidity. We follow his plan and anytime we have a disagreement in our finances, we ask the question, what would Dave do? That usually, almost always, resolves the dispute over what we should do with our resources.
Brandon Osterbind: It helps you provide a plan and the book that we always recommend to people who need a financial plan is The Total Money Makeover by Dave Ramsey. He will walk you through all of the different things that you should do with your money and the order in which you will do them, or you should do them.
Brandon Osterbind: He in the process, dispels a number of financial miss that permeate our society. When we should be thinking one thing, we in fact are told something completely different by our culture, our immediate culture, our get it now culture, our zero down culture. That is what our society tells us. We should get everything that our parents worked 30 years for. We should have it now.
Brandon Osterbind: I bought into that mentality early on in my adult life. I have since gone back on that and I have completely flipped. I think that it's been to our financial benefit to do that.
Brandon Osterbind: You can see a clip of our financial story. I'll post a video clip in the show notes here today so that you can go watch a little short video clip of what we went through and why we did it and how it benefited us. I really enjoy this video clip because it kind of tells a story in about two, three minutes. When if you asked me to tell my story, we can probably sit here all day. Never ask a trial lawyer to tell a story. You'll be in your seat for a long time.
Brandon Osterbind: Now, without any further ado, let's get into a few things that I think are important after you win your case, how to handle your money. I'm not going to recreate the wheel here. As you may imagine, being a follower of Dave Ramsey and a supporter of his Total Money Makeover and his baby steps in his Course Financial Peace University, which Kelly and I lead multiple times a year at Thomas Road Baptist Church. If you're interested in taking that course, we'd be happy to have you in our course. We'd be happy to teach you some financial lessons that we've learned over the years and in some ways to win with your money.
Brandon Osterbind: The first thing I'm going to tell you is that you just have to follow the plan laid out by Dave Ramsey in the Total Money Makeover. If you do that, at the end of the day, I think you're going to have a lot of success. I'll say that now, but I'm going to tell you that at the end of this podcast, I'm going to have a couple of caveats to that based on what you get from your personal injury case, your workers' comp case, or an ERISA disability case. Given the nuances that are applicable to those different types of cases.
Brandon Osterbind: Let me real quick, just run through the seven baby steps that Dave Ramsey recommends that you should do with your money and the first is, baby step one is save up $1,000 emergency fund. Most people in America are unable to cover $1,000 emergency right now. That may be you and there's no shame in that, that's normal. You are normal if you are unable to cover a $1,000 emergency right now. There is no fault or shame in that, but one of your first goals, in fact, that the very first goal that you should have is to put $1,000 in an emergency fund that you can't access easily.
Brandon Osterbind: You should be able to access it if you need it, but it shouldn't be so easy to access that you spend it with a debit card, or a credit card or whatever it is that you might be using. So $1,000 emergency fund will cover most emergencies.
Brandon Osterbind: Now, a lot of times I hear an objection, "Well, it won't cover if my transmission goes out." Well, you know what? If your transmission goes out and you've got a $2,000 fix, go buy a $500 beater car and drive that around for a couple months until you can save up the money to pay for your new transmission. Then you sell your $500 car for $500, that makes sense.
Brandon Osterbind: Believe me, when I was in college, my dad and I used to pride ourselves on finding that next $500 Honda. I would drive that $500 Honda until it died. When it died, I'd sell it for $500 and instead of putting money into it, I'd buy another $500 Honda. That's just how I learned how to drive. I never got into big, expensive vehicles when I was first driving in high school and in college. I don't think I bought my first vehicle that cost more than 500, $700 until I was in law school and I probably shouldn't have done it then.
Brandon Osterbind: Even then I think it was a seven or an $8,000 car. It wasn't a big purchase and I of course, had to finance it because it didn't have any money. I should have just kept driving those $500 Hondas. The first thing you do is you save up that $1,000 emergency fund and it will cover most emergencies. Even if it doesn't cover an emergency, it provides a sense of urgency for you to complete baby step two.
Brandon Osterbind: Now, what is baby step two? Baby step two is to pay off all of your non mortgage debt by listing your debts smallest to largest and paying off the smallest first. Dave Ramsey calls this the debt snowball. The debt snowball essentially says, "That if you pay off the smallest debt, you take the payment that you're making, you pay minimum payments on everything except for the smallest debt. Then once you pay off that smallest debt, you throw everything extra that you have at that smallest debt. Once you pay that off, then you take what you're paying on that smallest debt, and you apply it to your next smallest debt." You can see how the debts that you have start to snowball until you don't have anything anymore.
Brandon Osterbind: Now, Dave always deals with the objection that well, you should pay off the highest interest rate first. He says, "Yes, if you're a math nerd, that should be technically correct, but it doesn't provide you with a sense of momentum that you need to get through baby step two. If you take your largest debt, say a student loan and you've got a 6% interest versus a credit card that you may have a 12 or 13 or 15 or 20% interest rate depending on what you have, then you're not going to feel that momentum in getting things done and accomplishing things.
Brandon Osterbind: Through his study, through his teaching people to get out of debt. What he has found is that the quickest way to get out of debt is to pay off the smallest one first, take that payment apply it to the next smallest debt. That's what Kelly and I did when we were paying off all of our little car loans and student loan debts. All of our student loan debts were broken up into smaller ones. So we did the exact same thing for all of our student loan debt.
Brandon Osterbind: I'd have a $2,000 student loan debt and I'd have a $10,000 student loan debt. I paid off the $2,000 one first. Then I would go to the $10,000 and then I would go to the $20,000 one. Those aren't the actual numbers, but I'm just giving you an example. Baby step two, the debt snowball works. If you have a lump sum of money, then you should apply it first to baby step one, then to baby step two.
Brandon Osterbind: Then babysit three is for you to amplify your baby step one emergency fund. That means I want you to increase your emergency fund from $1,000 up to whatever that amount is to cover three to six months of your expenses. I'm talking about three to six months of expenses, not three to six months of your income and there is a difference. You need to calculate how much does it cost you to live if you should no longer receive an income? That number, you need to multiply by at least three and have that in that separate account that is difficult to access, easy but difficult to access. You don't want any penalties if you have to pull money out of that.
Brandon Osterbind: Don't put it in some type of a retirement account or anything like that. This is essentially insurance for you to make sure that if an emergency hits, you can pay your bills and provide for your family for that three to six month period. Save up three to six months of your expenses.
Brandon Osterbind: Now, baby steps one through three are all done chronologically, which means you do maybe step one, then you do baby step two. Then you do baby step three. You don't start the next baby step until you finish the one before it. The next three baby steps, however are all done simultaneously.
Brandon Osterbind: Let me walk you through those. Baby step four is save 15% into your retirement accounts. A lot of people will get matches from their employer and they would want to count that match towards their 15%. Dave says, "Don't do that." 15% of your gross income should be going into your retirement accounts and any matches that you get from your employer should be over and above that.
Brandon Osterbind: Dave explains this in intricate detail in his book, The Total Money Makeover. Make sure that you get that book and make sure that you read it and you understand it. He talks about the order in which account to put them in. You may have a 401k. You may need to fund an IRA. You may have a Roth IRA. He talks about the differences between all of those in his book. So, 15% of your income into your retirement accounts.
Brandon Osterbind: The next is baby step five, save for your kid's college. If you have young children, make sure that you're saving for their college education. College debt is one of the big reasons why people feel like they can't get ahead in our society. There is so much debt that no matter what you do, you get out of college and you're making 30, 40, maybe $50,000 a year if you're lucky and you have $200,000 in student loan debt, it's ridiculous.
Brandon Osterbind: If you get a degree that doesn't get you the earning capacity to make the money to pay off that debt, you're going to live the rest of your life in debt. You shouldn't do that and you shouldn't want that for your children. Let's save up some money. Let's figure out the cheapest way for them to go to college and let's figure out how to help them do that without saddling them with a bunch of debt.
Brandon Osterbind: Now, when I went to college, I didn't have a college savings account that would pay for my college. I took out a whole bunch of debt and I had to pay for that. That was a decision at 18 that I didn't fully consider. I didn't have all of the information that I have now. I haven't lived through all the experiences that I've lived through now. If I were sitting down with a high school senior today, I would tell them, don't borrow money. Go to a community college or apply for every scholarship under the sun.
Brandon Osterbind: If you don't have a college savings plan for your 18 year old child, make them apply to every scholarship that you can find. Make them set a goal for one to two scholarship applications done per day. What else are they doing? Get them into the habit of asking for scholarship money and then use that to pay for college education. I really could spend all day talking about college and saving for college and paying for college, but let's move on to baby step six, which is pay off your mortgage early.
Brandon Osterbind: Chris Hogan in his book Everyday Millionaires says, "That the average millionaire pays off their house in 10 years, in nine or 10 years." That was kind of shocking to me because everyone that I know, most of the people that I've talked to have 30 year mortgages, but these everyday millionaires, the people that you see at the grocery store living in an average value house for their community, driving an average car, working an average job, they pay off their house in an average of nine to 10 years. That's pretty shocking, but one of the things that they do is they take any extra money that they have laying around. They live frugally and they pay extra money on their mortgage.
Brandon Osterbind: If you're smart, Dave says, this is the only debt that he has a fuss at you for taken out, but if you take out a mortgage, you have to take out a mortgage in a very specific way. That is take out a 15 year fixed rate mortgage instead of a 30 year mortgage. Chris Hogan talks about the benefits of a 15 year mortgage versus a 30 year mortgage in his book, Everyday Millionaire, but Dave Ramsey also talks about it in his Total Money Makeover book. So pay off your mortgage early.
Brandon Osterbind: Then you get into baby step seven and if you think about it, your kid's college is planned for, everything is done, it's saved. You've got retirement accounts all set up, you're putting 15% into it. Your mortgage is paid off. You don't owe anybody a dime and you are free to live as you choose at that point. You don't owe anybody anything.
Brandon Osterbind: The Bible says, "The borrower is slave to the lender." If you don't have a lender, then you are not slave to anybody. You don't have to work. You don't have to work this particular job. If your boss wants to yell at you repeatedly, you can say, "Show me the door. I don't need this job. I don't need this experience. I don't need this poor behavior and I don't have to live with it."
Brandon Osterbind: Whereas if you owe a lot of money to the bank for your mortgage, if you owe the credit card company for your clothing habits or vacation habits, or if you owe Toyota or Honda or whoever it is that you're borrowing money for to drive the nicest car, then you are essentially slave to the lender. When you get to baby step seven, you are not slave to the lender. You're slave to no one you can live and give generously to whomever you feel you want to give to. You can go on trips. You can do work that is meaningful in your life. You have the freedom to do whatever God calls you to do.
Brandon Osterbind: Let's back up a little bit and talk about where you might be if you get a lump sum settlement out of a personal injury case, or a workers' compensation case, on an ERISA disability case, or a medical malpractice case, whatever it may be. Any types of these cases could give you a lump sum benefit of money. What should you do?
Brandon Osterbind: Well, the answer is simple, whatever baby step you're on that's what you do with it. If you're on baby step two, and you receive $100,000 settlement check and you have $70,000 in non mortgage debt. Then what I would tell you to do is take 70,000 of that $100,000 and pay off your debt. Now you don't owe anybody anything in the world. You may have, I don't know, $1,000, $1,500 extra a month that you don't have to make towards debt maintenance payments anymore. You can use that to go towards anything that you want.
Brandon Osterbind: Then you have an extra $30,000 sitting around that you can go into baby step three, which is save three to six months of your expenses and 15, 20, $30,000 would certainly do that for most people. Then you can end up with your extra money that you have in your budget, contributing 15% of your income towards your retirement.
Brandon Osterbind: Then also figure out how to get into saving for your kid's college. If you don't have kids, skip baby step five, but then any extra money that you get, any bonuses, any inheritances, anything extra that you might get. If you have a yard sale, put that money on your retirement account or paying off your mortgage.
Brandon Osterbind: Then once you pay off your mortgage, you are no longer slave to the lender or let's say that you've already gotten to baby step four, five, and six, and you get $100,000 settlement check. What should you do then? Then you put 15% into your retirement accounts, save portion of that for your kids college, and then apply the rest of it towards your mortgage. At the end of the day, if you do these things, you will not regret it.
Brandon Osterbind: Now, let me back up a little bit and get to the caveat that I mentioned earlier. That is if you have a personal injury or workers' comp or whatever settlement that is partly designed to compensate you for future medical expenses, that is going to be an issue if you take all that money and you dump it into your retirement accounts, or if you dump it into your non mortgage debt, or if you dump it into your mortgage debt. Whatever it may be, whatever baby step you may be on, if you take all that money and you apply it towards one of the seven baby steps, then you might be in trouble when you need to receive that future medical treatment.
Brandon Osterbind: Depending on your insurance arrangement, you might have to bear the burden of paying for that medical treatment before your health insurance will pay for it based on the settlement amount that you got. For example, a lot of times Medicare has this as a requirement before you get any benefits from Medicare, you have to have a fund approved at the time of your personal injury or your workers' comp settlement.
Brandon Osterbind: A lot of times you have to make sure that you're thinking about your future treatment issues and how Medicare paying for that future treatment will be affected should you need to get some of that in the future. What I always say for people is, if you are designating a certain amount of money towards future medical treatment, you should not apply it towards your baby steps. You should create a separate fund that you keep separate from all of your other accounts, just for these accident related or disability related medical expenses.
Brandon Osterbind: That will help you in the future to be financially able to get the treatment that you need to get, to get better and it'll help you feel like you are fully compensated for your injuries in your accident from the person who caused your injuries in your accident or from your employer should you not be able to do your work anymore.
Brandon Osterbind: At the time you get this lump sum money, it's important to sit down and to think about what that money was designed to do. Part of it is obviously designed to compensate you for past medical expenses and maybe you have to pay some of that back to your health insurance or to Medicare or to Medicaid or whatever it may be. To TRICARE if you're a veteran on TRICARE or if you were treated at the VA, you may have to pay some money back to the VA.
Brandon Osterbind: All of those things might have to get paid out of your settlement, but if you have money that's intended to compensate you for past and future pain and suffering, inconvenience, mental anguish, physical pain, that sort of thing. That money is money that is designed to help you compensate, gets compensated for those noneconomic damages. When you think about what should I do with that money, think about these baby steps and think how do I get ahead in life with this money instead of just blowing it on something that I won't be happy about later on.
Brandon Osterbind: Instead of buying the newest and greatest car or new toys to play with like a boat, or a guitar, or a gun, or jewelry or whatever it may be. I've seen a lot of people use money in a lot of different stupid ways and I've used money in a lot of different stupid ways, just like that. If I had the opportunity to go back and not be stupid with my money again, I would take that in a heartbeat, but we can't change the past. We can only change who we are today and who we're going to be tomorrow.
Brandon Osterbind: I hope that this episode has been helpful for you. Go ahead and give us a call or send us an email if you have any questions about how to handle your finances. We are an open book when it comes to money and how to handle our money and what we should do and what we shouldn't do. We rely a lot on Dave Ramsey and his teachings and Chris Hogan and Rachel Cruz and all the good people over there at Ramsey Solutions. Ken Coleman, all those people over there. They're incredible people.
Brandon Osterbind: They've got an excellent message and they're just wise beyond their years and they've helped us immensely. Even if you don't buy any of his materials, if you follow him on Facebook and on Twitter, and if you listen to Dave Ramsey's podcast every day, there's three hours of podcast every single day, you don't have to listen to all of it, just listen to some of it. Put it on when you're driving in your car, whatever it may be and just listen to him answer questions by walking through these baby steps. You will benefit from it exponentially.
Brandon Osterbind: Just like Kelly and I have over the course of the last six or seven years. If you want to take Financial Peace University, I'm sure there is a class in your area right now starting soon. There is almost always a class to be started at Thomas Road Baptist Church. I will give you the link in the show notes to our FPU page at Thomas Road Baptist Church and you can look for that for updated information about upcoming courses. We would love to see you there.
Brandon Osterbind: Thank you so much for listening to this podcast and I'll see you next week.
Announcer: Thanks for listening to the Insight to Injury Podcast by Osterbind Law PLLC. Where we declare mortal combat against information inequality about your injury or disability. We hope you enjoyed this show, but don't stop here. Don't stop here. Subscribe to this podcast on iTunes and give us a five star review. We need your help so that we can help more people.
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- Thomas Road Baptist Church – Financial Peace University
- Total Money Makeover by Dave Ramsey (affiliate link)
- Retire Inspired by Chris Hogan (affiliate link)
- Everyday Millionaire by Chris Hogan (affiliate link)
- Dave Ramsey Podcast
- Short Video of Brandon and Kelly’s Financial Peace Journey:
“My Road” with Brandon & Kelly Osterbind from Thomas Road Media on Vimeo.