During a time in my life when I was experiencing extreme and extenuating circumstances, enrollment in the FSA (Flexible Spending Account) and 401k plans offered by my employer ended up being my best financial decision ever.
For me, it wasn’t about how much money I made or saved, or really even about any investments per say. It was about putting the money in the right place, at the right time, so that when I needed it, BOOM! It was there! Enrolling in a FSA and 401k really saved me.
How These Programs Helped Me
2006 was an exciting year for me. I had recently started working at Honeywell Aerospace as a Non Destructive Testing Inspector, (that sounds like a way cooler job than it is) bought my first house, and was supposed to be getting married in July. As usual, however, life is unusual.
Below is a chronological list of how things actually turned out for me that year.
March – A trip to the E.R. for major stomach pain turns out to be appendicitis
- Resulted in appendectomy
- Cost – No out of pocket. Covered entirely by insurance & FSA
April – Fiancé ditched me for an ex boyfriend (3 months before the wedding)
- Resulted in her emptying my bank account, and failing to pay any bills for 2 months prior to leaving. (Which I discovered when the Power Company showed up at my door to turn off the electric.)
- She also received refunds for all the deposits we had placed for the wedding.
- Cost – A Whole Lot. (All out of pocket, but my 401k later helped me catch back up on bills… we’ll get to that.)
October – My mother experienced health problems and got behind on her house payments. (She is now disabled.)
- Resulted in me taking out another loan and buying her house (Which meant I was now making 2 house payments and was getting even further in debt.)
- Cost – (No out of pocket money upfront, but I did make her first 6 mortgage payments until her SSI Disability was approved.
November – Thanksgiving! This meant family, friends, food, fun, and of course football!
- This year our friendly game of tackle football resulted in me getting 2 cracked teeth!
- Cost – Nothing out of pocket. FSA and Insurance covered the entire bill
By December I was absolutely overwhelmed with bills and bad debt. I was facing foreclosure myself now. Luckily, my 401k plan allowed for a “hardship withdraw.” Sure, I paid a hefty fee for early withdraw, but without it, my ship was sure to sink. If it hadn’t been for my enrolling in both the 401k and FSA, my bad year could have been a whole lot worse!