Living on Disability: 10 Financial Planning Tips From Suze Orman

Here’s a thorough guide to help you survive financially while receiving Social Security disability payments.

By , Attorney
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The application process for Social Security disability insurance (SSDI) is usually long, especially if you're denied benefits and need to file an appeal. While the process could be as short as three months, it might take a year or two before you're approved for disability benefits.

In the meantime, you might have trouble paying your mortgage, credit card bills, medical debts, and other financial obligations. Even after you're awarded benefits, you might find it tough to make ends meet on the amount you receive each month. (The average SSDI payment is about $1,300.)

But don't panic: You have options.

Personal finance guru Suze Orman is renowned for advising people on how to get through difficult economic times, like waiting for SSDI approval and living on a limited budget. Here are a few of Orman's money management strategies that can help you survive financially before your disability benefits kick in, and even once you start getting the payments.

1. Live Below Your Means but Within Your Needs (Make a Budget)
2. Get Help From a Nonprofit Credit Counseling Agency
3. Manage and Reduce Your Credit Card Bills and Other Debts
4. Think Through Your Options When You're Facing Foreclosure
5. Maintain Health Insurance
6. Deal With Your Student Loan Payments
7. Be Careful About Riskier Sources of Income
8. Check Out Other Options for Staying Afloat Financially
9. If Appropriate, Consider Bankruptcy
10. Speed up the SSDI Process by Hiring a Lawyer

1. Live Below Your Means but Within Your Needs (Make a Budget)

According to Orman, you should "live below your means but within your needs." While you need to pay for food and other essentials, you might be spending too much on these items. The cost of eating out instead of at home or driving your own car instead of catching public transportation might seem insignificant, but those expenses add up. You might be able to make different choices and save some money. Orman's website offers a home budget calculator so you can see where your money is going and identify areas for improvement.

Make a budget and stick to it. If you see something you hadn't planned to buy and don't immediately need, skip it. And don't buy an item just because it's on sale. Don't spend on things you don't really need. If you purchase an unnecessary $50 item on sale for $30, you haven't saved $20; you've needlessly spent $30. According to Orman, "If it's a want, just walk away. If it's a need, then buy it." Also, periodically check your budget against your actual spending patterns. Are you spending more than you planned? If so, adjust your spending habits accordingly. Adjust your budget too if sticking to it isn't helping the way you thought it would.

2. Get Help From a Nonprofit Credit Counseling Agency

If you need help dealing with your creditors or managing your finances, Orman suggests contacting a nonprofit credit counseling agency. Credit counselors give advice about handling debts, managing finances, and developing a budget—and will work for free or at a minimal charge. A counselor can also:

  • let you know whether you might be judgment proof (see below)
  • tell you if a debt management program could be appropriate for your situation, and
  • help you understand the implications of filing for bankruptcy. (For more on that option, see below.)

If you decide to get assistance from a credit counseling agency, check out the company's credentials, including whether it's really a nonprofit, first. For-profit debt relief companies often charge excessive fees, fail to perform promised services, or provide bad advice.

Here are a few ways you might go about finding a nonprofit credit counseling agency:

  • Look for a company with accreditation from the Council on Accreditation (COA) or the International Organization for Standardization (ISO).
  • Consider using a member of the National Foundation for Credit Counseling (NFCC), which the COA accredits. (You can contact the NFCC at 800-388-2227.)
  • Find out if the counselors working for the agency are certified by an independent agency, which means they've passed a certification exam that tests for understanding in areas like counseling, budgeting, credit and consumer law, debt management, and bankruptcy.
  • Check to make sure no complaints have been filed against the company with your state attorney general's office, the Better Business Bureau, and local consumer protection agencies.

3. Manage and Reduce Your Credit Card Bills and Other Debts

If you have credit card bills you can't pay, you can negotiate with your creditors, says Orman. For instance, you could be able to negotiate lower monthly payments or a reduced interest rate, either temporarily or permanently. Then, your payments will be more manageable.

Or maybe you'll be able to convince a credit card company to settle your debt by offering to pay less in a lump-sum payment. (Though, you usually have to be behind on payments for a credit card company to accept less than the full balance.) This negotiation strategy can also work for medical charges or other debts. For instance, some medical providers are happy to work out deals with those who can't pay.

Before contacting a creditor or collector, determine your goals and pick a few negotiation strategies. Orman recommends negotiating with your credit card company to get the best possible interest rate. She also recommends that you make sure you fully understand how your credit card works, including fees, how the balance is computed, and the grace period. That way, you'll know what terms you might be able to adjust.

Also, many banks, credit unions, other lenders, and credit card issuers offer assistance programs like deferred payments to consumers who've been financially affected by COVID-19.

4. Think Through Your Options When You're Facing Foreclosure

If you own a home and are struggling to keep up with your mortgage payments, you might qualify for financial assistance from a state initiative. For instance, you could be eligible to receive money to cover your mortgage payments, property taxes, homeowners' insurance, utility costs, or other housing-related expenses from your state's Homeowner Assistance Fund program.

Many cities and local areas also have organizations that can help you with home costs. Or, if you have equity in the property, you might consider refinancing the mortgage to lower your monthly payments. According to Orman, another option is letting go of the property, like by selling the property, and moving to a more affordable place. But be careful with these options if you have debt in collection. Home equity is protected in certain situations and you might be giving up some of that protection.

In addition, almost all lenders and mortgage servicers offer "loss mitigation" options (foreclosure alternatives) to homeowners who are having trouble paying, including:

If you have a federally backed mortgage loan and are experiencing a financial hardship due to COVID-19, you can get a forbearance while the national emergency is still in place. If you want to learn more about the alternatives that might be available, contact a HUD-approved housing counselor, who will assist you at no cost.

5. Maintain Health Insurance

Medical emergencies usually can't be avoided, but as Orman points out, you can guard against their cost by having a good insurance strategy. Living without medical coverage is simply an invitation to financial trouble. Maintaining health insurance can protect you from unforeseen medical expenses. (And if your disability prevents you from working, you might need ongoing medical assistance.)

You can request a quote for a healthcare plan available under the Affordable Healthcare Act (Obamacare) that covers preexisting conditions. You might be eligible for cost-sharing reductions (discounts that lower how much you must pay for deductibles, copayments, and coinsurance) or a premium tax credit.

If your income level is between 100% and 400% of the federal poverty level, you automatically qualify for premium tax credits. provides a link to a tool for finding health insurance suited to your needs, as well as links to additional health insurance resources.

People who get approved for Supplemental Security Income (SSI) are eligible for Medicaid, and those approved for SSDI get Medicare two years after their "entitlement date" (which is often well before they apply). If you're waiting for SSDI approval, you might be able to get Medicaid coverage while you wait.

6. Deal With Your Student Loan Payments

Student loans are one of the most dangerous types of debt to have, says Orman. Fortunately, most federal student loan payments are on hold as of February 2022, and interest is waived through May 1, 2022 because of COVID-19. Collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans are also paused during this time. While your federal student loan payments are on hold, it's a good time to learn about programs that might provide relief in the future, like cancellation, deferment, and forbearance, as well as income-based repayment plans.

If you have private student loans, you should know that some states have made deals with servicers to help borrowers who aren't covered by the federal student loan payment suspension. And if you live in a state that isn't a party to such an agreement, know that most private student loan lenders offer repayment options to borrowers who're facing a COVID-related financial hardship.

7. Be Careful About Riskier Sources of Income

Other, riskier sources of income might be available while you wait for the SSDI process to play out or if you need additional money while receiving benefits. For instance,

  • you might be able to borrow against or cash out your 401k or life insurance plan
  • if you own your home, you might be able to take out a home equity loan or line of credit
  • you might be able to get another kind of loan, like a personal loan, or
  • you could try to get another credit card.

But Orman warns that an option like borrowing from a retirement account is only for emergency situations. With any of these options, you're taking a considerable risk of not being able to pay the debt back. Your SSDI application could take longer than expected to get approved, you could have to deal with a long appeals process, or your application might get denied. Or you might not be able to repay the debt even after your disability payments arrive.

So, choosing any of these alternatives isn't a good idea for most people. But for a disability claimant who has a good chance of being approved and is in a desperate financial situation, these are possibilities to consider as a last resort. But no matter how tight money is, Orman says you should definitely stay away from payday loans.

8. Check Out Other Options for Staying Afloat Financially

According to Orman, it often pays to look for hidden money. For example, Orman notes that if you move or leave a workplace, someone who owes you money might not be able—or want—to find you. After a certain amount of time, the money becomes "unclaimed" and has to be turned over to the state. To find out if you have unclaimed cash or other property waiting for you, search for your name in your state's unclaimed property database. If you're owed money and you make a claim, you'll get a payment in a couple of weeks. You can find a link to your state's unclaimed property database on the National Association of Unclaimed Property Administrators (NAUPA) website.

You might also have options that aren't so hidden. If you're in dire financial straits, you might be able to qualify for public assistance, food stamps, energy assistance, or other programs. For example, you might be eligible for some of these programs:

  • Temporary Assistance for Needy Families (TANF). The federal TANF program provides funding to states to provide financial assistance to low-income families for a limited time.
  • Energy assistance. The federal Low Income Home Energy Assistance Program (LIHEAP), which is state-run, helps low-income customers pay their utility bills.
  • Food Stamps. The Supplemental Nutrition Assistance Program (SNAP) is a federal nutrition program, previously known as "food stamps," for low-income individuals.

Get in touch with your local Department of Social Services (DSS). DSS workers can usually inform you about different assistance programs in your area. Family, friends, churches, and religious organizations are also sometimes willing to offer aid with basic needs, like rent or mortgage payments, utilities, clothing, food, and other necessities.

9. If Appropriate, Consider Bankruptcy

Orman generally recommends considering bankruptcy if you really don't have money to pay your bills and if the circumstances are right. But if you're on a fixed income, like SSDI, the first thing you should ask yourself is, "Would I actually benefit from filing for bankruptcy?" Most people on disability benefits are judgment proof because all of their assets are safe from creditors due to exemptions. So, it might not be worth it to file.

But if you think filing for bankruptcy could help your situation, the next issue you'll want to investigate is whether you can protect your monthly disability payments and any lump sum of back payments.

The federal Social Security Act generally protects ongoing disability benefits from being seized. But don't comingle (mix together) your SSDI money with other funds because you could lose your exemption status. So, keep your SSDI funds in a separate account. Also, you should know that it's usually hard to protect large amounts of cash if you file for bankruptcy, so if you have a lot of money in that account, make sure that your specific state exemptions allow you to protect it.

Most people who file for bankruptcy and are on a fixed income file for Chapter 7 bankruptcy because they don't qualify for Chapter 13, which requires a repayment plan.

If you decide to file for bankruptcy, you'll want to get the timing right. For example, if you have ongoing medical problems, which could generate more debt that bankruptcy might be able to wipe out, you don't want to file too soon. Before you decide to file for bankruptcy, be sure to talk to a bankruptcy attorney to learn how bankruptcy could affect your disability benefits and whether it's in your best interest to file.

10. Speed up the SSDI Process by Hiring a Lawyer

To some extent, you can't control the time it takes to get an initial SSDI decision. Nor can you control how long the appeals process takes. (Two-thirds of all initial disability applications get denied.)

But one way to speed up the disability approval process is to retain an experienced disability expert who can help you complete the application correctly and build a solid, clear claim for benefits. Orman says that it's been shown that one of the best ways to increase your chances of approval—by two to three times—is to retain an experienced disability lawyer or advocate.

A disability lawyer or advocate can make sure to submit all of your information and documentation correctly to reduce your chances of receiving an initial denial. If you do get denied, they can also file a prompt appeal on your behalf and represent you at your hearing.

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