Budgeting Right: How to Maximize Your North Carolina Workers’ Compensation Benefits

August 16, 2011, by Michael A. DeMayo

Perhaps you’ve received North Carolina workers’ compensation benefits after a long, hard fight. Or you may be just beginning the process, researching your options, interviewing attorneys at various North Carolina workers’ compensation law firms to figure out who can help you deal with a bad faith insurance company or a boss who refuses to understand your predicament. In any case, you face a long-term challenge with your recovery – one that many people fail to recognize even exists. The challenge is this: When you subsist on a fixed income, you must “make room” in your budget for surprising, variable costs.

Fixed cost is something that you pay every month at a regular interval. For instance, your rent, your insurance premium, the parking permit for your condominium complex, etc. Variable costs change over the time. You can’t predict them exactly. For instance, your grocery bill varies from month to month, as well the amount you spend on gifts or on fun accessories, like electronics or gadgets for dad.

We are all told – we all know – that we need to budget for variable expenses carefully – to make sure that we have enough money to deal with these strange costs.

But if you apply the thinking of Nassim Taleb, author of the Black Swan, you will quickly recognize that small allotments for variable expenses may not be sufficient.

To put that in plain language: If you are on workers’ comp, and you and your spouse are only bringing in a certain amount of money a month, and you’ve “conservatively” budgeted to spend Y amount of money (where Y is less than X), then you may not be as safe as the math says you will be.

Taleb’s big insight is that shocking, unexpected events – so called “Black Swan” events – can radically throw off your financial plans.

In other words, even if you’ve budgeted carefully to save Z amount of dollars every month (where Z=X-Y), and you’ve been careful and accounted for all the variable costs we discussed above, this kind of linear, rational thinking may not save you from big “Black Swan” events. For instance, say you or your spouse develops a catastrophic medical condition or gets into an accident. Or say you have a change of heart one day and realize that your apartment is too small, and that you must, must, must move to a bigger place or your family is going to go completely insane. You take on these extra expenses that completely wreck your budget.

There is no quick and easy answer to defend against “Black Swan” events from messing up your budget. But even just knowing that they exist is a huge help in your planning. This will give you insight into the almost irreducible complexity and uncertainty of planning in the real world.

To make progress, you need different ways of thinking about planning effectively, and you want to connect with the resources that can help you solve your problems as they occur – because they will occur whether you expect them to or not. For instance, a reputable North Carolina workers’ compensation law firm can help you navigate surprising and perhaps even shocking obstacles that might get thrown in your path – such as a bad faith insurance company or an employer/boss who, out of the blue, denies that your workplace accident/injury ever took place.

More Web Resources:

Budgeting right

Black Swan

 
 

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