Stretching Your Car Accident Settlements to Go the Distance
You had an accident and prevailed in your lawsuit. The good news is you won't have to pay taxes on your personal injury settlement in Texas. But, what do you do when you have paid the lawyers, doctors, and others who helped you along the way? While you may have enough left over for a small splurge, it is a wise idea to take a longer view of how you will manage any car accident settlements you receive.
Get Good Advice
Speaking with a financial advisor and accountant are the best steps to take once the check is deposited in your bank account. A certified financial planner can help you develop an effective strategy for squeezing the greatest value out of every penny.
One of the most important considerations is whether you have long-term care expenses, surgical procedures, mental health counseling, or other accident-related expenses in the future. Always set aside sufficient funds to cover these known or anticipated expenses.
Many financial advisors will advise you to pay off any high-interest debt you have. These include any credit cards or other bills you accumulated as a result of the accident. Paying these off will help you protect your credit and ensures your hard-earned money doesn't evaporate in interest payments.
It is also a good idea to build up an emergency fund; it is especially important if you may be facing long-term disability as a result of your injuries. Many financial advisors in Texas advise clients to maintain between 3-6 months worth of cash assets to cover all standard monthly expenses.
Many people also choose to pay down and refinance mortgages to reduce monthly expenses. In cases where the car accident settlements are significant, many accident survivors opt to purchase rental property to help supplement their monthly income and provide financial protection against any potential long-term disability.
Finally, whatever funds remain after you have taken care of the basics and your long-term financial needs, well, that is your splurge budget. You can use it for education, vacation, or anything else you desire as your mind and body continue recovering from your car accident.
Contact Welmaker Injury Law at (800) 494-1916 for more information about steps you can take to manage car accident settlements. We can also provide you with referrals to financial advisors who can help you manage your settlement.