Financial Safeguards: Would You (& Your Family) Be OK if You Couldn’t Work for 2 Months?


Not too long ago, I was attending an investor mastermind meeting in Dallas, TX, where we broke up into roundtable groups of about six people. The moderator proceeded to ask us all a very thought-provoking question. He said, “What will you do if something drastic happens and you get hurt or became incapacitated, causing you not to be able to work at all (no internet or phone) for the next 60 days?”

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What Would You Do if You Couldn’t Work for Two Months?

Right about now, you may be thinking that this is one of those scary financial planning questions or that it’s something your life insurance agent (who’s trying to make another sale) might ask you. You’re probably right, but stay with me. This is actually a great question for any of us to think about.

I remember the folks at my table all had completely different reactions. For me, I remembered back to when I was a painting contractor and my entire business revolved around me.

Sure, I had my own business and felt like I was in control, but did I really have it all together? The answer was no.

After a few years, at age 42, I severely hurt my back. I was fortunate that I had approximately 20 rentals at the time, which offset my earned income. Without that, things would have been devastating for me and my family (my wife and two kids).

The other good news, besides the rentals, was that I already had a college degree and a real estate license. Or in other words, I had other marketable skills. But back to the question asked in Dallas. If I couldn’t work at all during that time, then what would have happened?


Related: How to Use Real Estate to Retire MUCH More Comfortably Than Your 401K Would Allow

I guess my wife could have potentially worked full time, and I know I had disability insurance, but it didn’t really kick in for another six months. I would’ve had to try and live off of my savings.

In a perfect world, we would all have six months of liquid reserves to cover our expenses. But if that’s not possible, maybe the next best thing would be access to cash (for example, credit cards or lines of credit on properties).

Today, things are very different. My note company was designed so that operations would not revolve around me. In fact, I travel quite a bit, and my team seems to run pretty well even when I’m away.

The others at my table were all over the place. One couple was close to retirement and had been planning for a while, so they seemed pretty prepared. The other couple next to me wasn’t prepared at all. The husband was a dentist, and his practice revolved completely around him. Also, he didn’t have much of a plan B. Although he was a high income earner, he didn’t have any real passive income to speak of coming from his investments.

What Would You Do if You Could Never Work Again?

After the groups were done discussing what would happen if they couldn’t work for 60 days, the moderator proceeded to ask the follow-up question: “What would you do if you could never work again?”

OK, now it was getting serious. For me, this question might even be scarier than if I was asked, “What would your heirs do if you were to check out?” Obviously, most of us don’t like to think of our own mortality, but often we don’t like to think of other scenarios, either — such as never being able to work again.

If I had been in this situation back when I hurt my back, things could’ve gotten really dicey. Now I do have more safeguards in place.

As for the folks at my table, the older couple was pretty much set, but the middle-age dentist and his wife were in trouble. He didn’t really have anything set up to replace his income, especially before retirement.

So, what safeguards could you put in place if you don’t have any?

Well, besides having reserves, it’s a good idea to have assets that throw off some cash flow or provide you with access to cash if you need it.

Cash-flowing real estate and notes may be the best option. Although, depending on someone’s situation, they may need to be less active and invest more passively by hiring a property manager or a licensed mortgage servicer. Dividend paying stocks could throw off some revenue, and liquid bonds could provide access to some cash.

Related: This Lesson From My Mastermind Group Completely Changed My Real Estate Business

Obviously, disability insurance could help, with up to two-thirds of what you would normally gross. That being said, the longer you go before it kicks in, the cheaper the policy is. Another potential safety net is a permanent life insurance policy, as it may allow you to borrow out cash value tax-free anytime you need it. Of course, some retirement accounts will also allow you to take penalty-free withdrawals for certain medical expenses.

The questions asked at my Investor Mastermind meeting, as well as some of the options mentioned above, may be helpful for any of us to consider as we look at our own financial situation and plan for the future.


What Do You Have in Place?

As my buddy Jeff Brown always says, “Everyone should only have one goal in life. Get as many cash flowing assets in place as soon as possible, and get as many of them tax-free or tax-deferred as possible (IRA accounts, insurance contracts, etc.), but especially before retirement.”

So, what safeguards do you have in place? God forbid something life-changing were to happen to you, do you have a plan B or C? If so, what’s that look like?

Let me know your thoughts with a comment!

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.


  1. Great article Dave, as this topic is usually overlooked by new investors who put all if any cash reserves in to investments. They fail to keep adequate cash reserves for times as you describe. We keep one years worth of salary in savings account, and currently have 4-units to supplement a small portion of our monthly income. The strategy for now is to continue creating additional streams of income that can surpass our current w-2 and then some.

  2. Bryan Drury

    Dave, Great thought provoking article.Thanks to my wife we have 6months cash reserves accessible.Also have LOC on property that is easily accessible.We have some cash flowing properties and notes but I think we need additional income streams to fill in in case Mr Murphy comes calling.
    Starting early is critical and having foresight to take action is important.Thanks for the reminder

  3. Kimberly Ashkenazi

    Hi Dave,

    Great article! I’m contemplating those questions now…they’re good ones and I’ve never heard that spin before. We have savings and are growing our buy-and-hold RE portfolio, but I would like to add some notes to the mix.

    You mentioned insurance contracts — Can you explain a bit more? How could I invest in those? What is the tax treatment?

    • Dave Van Horn

      Hi Kimberly,

      Thanks for commenting.

      And sure thing! There are certain policies designed to build up cash value rather than a death benefit. So for example, permanent and key man life policies are another safe bucket that can be utilized as a family bank or business bank through accelerating their cash value. They also have favorable tax treatment (since you’re essentially borrowing low interest loans out of your own insurance policy) and from an estate planning perspective they pass favorably through to heirs. And in terms of safety, in most states they’re judgement and bankruptcy proof. So building up the cash value in policies can be another alternative way to invest especially when all other retirement vehicles are exhausted. “Missed Fortune 101” by Douglas R. Andrew and R. Nelson Nash’s “Becoming Your Own Banker” are good books on this and can expand on some of these concepts further.

      Also, since you mentioned you’re interested in notes, I’ll have to PM you a copy of my new Introduction to Note Investing E-book!


  4. Shawn Corcoran

    Thank you for writing this article. This article really hit home for me. In August of 2015 I was in a really terrible auto accident. I broke my foot in two places, dislocated my left shoulder and broke my back in four places. Luckily I am working on my real estate investing business outside of my regular 9-5 job. I am also very lucky I have over a years worth of sick leave in that job. My accident really changed my priorities in life and really got me thinking about what would my family done if that was our only source of income. This article is going to help me in more ways than you know. Thank you so much for writing and posting this.

  5. Dave Van Horn


    Thank you so much for sharing your story. I’m glad to hear your Real Estate Investing career was able to keep you going and hopefully you’re getting back on track.

    I personally never had a major accident, but when I read stories like these I often think back to one of my best friends who had passed away at the very early age of 36. He had a great job, a wife and three kids, and of course he wasn’t prepared to receive a cancer diagnosis at such an early age. There’s hardly anyone prepared for something like that at when they’re so young but along with my injury, it really had a big effect on my life and my priorities.

    This article is for you and everyone out there who isn’t there yet with their investing career.


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