Getting Sued and Mental Age
Today’s post is something of a rant about my recent problems. Yes, Mr. Tako has problems too! Normally I’m not big on ranting, but today you get the special treatment!
Remember how last week I mentioned some of the difficulties on The Road To FI? These kinds of obstacles are typically hard to avoid, and usually have a big financial impact. Well, one of these fabulous situations happened to the Tako family recently: We’re getting sued!
The Car Accident
A little over a year ago Mrs. Tako was in a car accident. At the time, Mrs. Tako was driving our 2001 Honda Civic (with just over 100k miles). From the parking lot of a local strip mall, Mrs. Tako pulled-out onto the street, and was quickly hit buy a Mercedes SUV.
Apparently, Mrs. Tako failed to see the oncoming SUV. The speed limit of that particular street was 35mph. Based upon the damage to both vehicles involved, I would guess the Mercedes was traveling a bit faster than the posted speed limit.
The driver of the Mercedes SUV was not seriously hurt. She was out of her car moments later, yelling at Mrs. Tako and calling the police.
At the time, Tako Jr. #1 was not in the car, but Tako Jr. #2 was. Mrs. Tako was pregnant with him at the time. She suffered a concussion, and some significant bruising, but no broken bones or significant external damage. A ultrasound scan of the baby a day or two later revealed he was OK. We all breathed a big sigh of relief.
The police determined the accident was Mrs. Tako’s fault, and our car insurance payed out the value for both vehicles. Both vehicles were totaled. We used the cash to buy our next vehicle a few weeks later, adding our savings to cover the cost.
End of story, right? That’s life, car accidents happen, and that’s why we have insurance. Right? Right?
One Year Later
Fast-forward one year later. The car accident was a distant memory, albeit an unfortunate one. We had just returned from our Hawaii trip, and the doorbell rings… Who could it be? Surprise! It’s a nice man from the courthouse serving us papers. We’re getting sued!
Oh Crap.
So why are we getting sued? Turns out, the driver of the Mercedes SUV wasn’t happy with the insurance payout. Unfortunately, she had just purchased her Mercedes a month or so earlier. She bought it new, from the dealer.
As we all know, once you drive a new vehicle off the dealer’s lot, it loses significant value. That’s just the cost of buying new cars. Well, unfortunately for the driver of the Mercedes, the insurance payout for her vehicle didn’t cover the cost of buying a new Mercedes SUV. Boo-hoo!
Let’s everybody shed a few tears about the reality of depreciation.
Well, instead of learning from her financial mistakes, she decided to get her lawyer involved and do a little sueing. The Mercedes owner wants us to pay an additional $60,000 and cover her lawyer fees. Yeah….
As you can imagine, we’re a little peeved about the whole situation…we’re getting sued because she’s not able to buy a new Mercedes. In contrast, the value we received for our Civic came nowhere close to covering the cost of a new car. We covered all additional costs with our savings. Why couldn’t the Mercedes driver?
Note: According to our lawyer, the Mercedes driver originally paid $75,000 for the vehicle. Not exactly a small sum.
Our Representation
Getting sued is no fun. Typically a person needs some legal representation, and thankfully our insurance company stepped up and provided a lawyer for us…at least up until the limits of our policy. In this case, the insurance company will handle a settlement of $50,000 or less. Anything over that $50k amount, (or appeals) and we’ll going to be on our own.
So far, the odds are looking pretty good that the Mercedes driver (and her lawyer) are going to settle for less than $50,000. They’ve agreed to arbitration, which should happen sometime in June or July. Usually this means her lawyer (and our lawyer) sit in a room with a third party mediator, and hash out some form of reasonable settlement like civilized people.
Cross your fingers that it ends there! We certainly are!
Stealth Wealth It
Thankfully, the driver of the Mercedes has no idea what we’re worth financially, and she definitely doesn’t know I’m Mr. Tako. She’ll probably settle for less than the aforementioned $50,000.
I haven’t mentioned it before, but NOW it’s time. We need to talk about Stealth Wealth.
What’s Stealth Wealth you ask? Stealth Wealth means you don’t show off your wealth. You don’t talk about it, or giving any indication of wealth to the outside world. In the litigious society that we live, any sign of significant wealth makes you a target for lawsuits! Stealth Wealth is a way of protecting yourself.
So here’s a little tip from Mr. Tako: Don’t tell people you have money. Not even family members. Don’t wear fancy clothes, or drive fancy cars. Don’t give any indication you have wealth, or someone is going to try to take it from you.
Ever notice I never reveal my true identity or location on this blog? Many personal finance bloggers are more forthcoming with their actual identities. I think this is a bad idea. It puts them at additional risk.
To give you an example: Mr. Money Mustache (probably the most successful personal finance blogger in recent years) has been sued multiple times.
For now, please be content with my super hero identity: Mr. Tako.
Mental Age Frustrations and Thoughts
If you’re a regular reader of my posts, you know we’ve had family visiting us for the past few weeks. Extended visits from family can be great, but they can also end up being a lot of work. It all just depends upon the family.
In our case, we happen have a family member that’s quite a handful. She has a “mental age” equivalent to a teenager, even though she is far older than me.
We get to see all the usual stuff you might associate with unruly children: pouting, fighting, fits, self-centeredness, and disagreeable behavior. The whole emotional roller coaster you’d typically see from a child (or teen), only in an adult.
Think I’m kidding? Let me give you an example:
We all went to lunch this weekend at a local brew-pub. Fun times, right? Who could get upset about that?
The location was decided on the day before, with all family members present. We arrived at the restaurant with no fuss, until we were seated. Then, our “favorite” family member decided this wasn’t the restaurant she wanted. She started an argument, and ended up walking-out in protest of our (collective) restaurant choice. This kind of behavior I might expect to see in a child, not an adult.
The incident got me thinking about “mental age”, and financial independence.
Are the minds of financially independent people somehow different from perpetual wage-slaves? Are the brains of the financially independent somehow more “mature”, allow us to defer spending and put-off hedonic pleasures to achieve financial independence?
I don’t have any specific evidence to support my thoughts here, but I have a guess there’s some truth to it. The mental control and maturing we (hopefully) develop in early adulthood is probably the same mental ability that allows me to live with imperfection.
From what I can see, the mental ability to put-off spending, and save 50% of my salary for a very long time is quite rare. Then again, maybe we’re just jerks for eating at the wrong restaurant.
What do you think? Does a person’s “mental age” help their chances for financial independence?
[Image Credit: Flickr1, Flickr2]
Ugh that stinks about getting sued. Do you have an umbrella policy that would cover above $50k (if she was driving a vintage Mercedes or something)?
You last point about mental age is huge I think. When I was 23/24, I acted like a college student. I drank (a lot), ate out a lot, blew my money (no CC debt thank god), didn’t work out, and was behaving like a teenager should not adult. Luckily for whatever reason when I was 26, I found FIRE, decided to grow up fiscally and personally. No pouting and storming out of restaurants for me!
For me, it ‘clicked’ after a bout with unemployment. I really had to “grow up” in a very short amount of time, or end up on the street.
Urgency is usually a good trigger to grow up 🙂
Wow – this is definitely eye-opening.
First off, sorry to hear about the accident and the lawsuit.
I never really thought too much about the importance of “stealth wealth.” This is something that will really stick with me. I don’t really discuss net worth with anyone except my brother, but I do discuss the path to FIRE and this makes me realize that I even need to tone this down.
— Jim
I think there is an incredible difference in the minds between the financially independent (especially at a young age) and the wage slaves. To understand what “enough” means to you, and possess the requisite discipline to actually operate within those confines and save any remaining money for something bigger and better than just “stuff”, means that you’re definitely different from the mainstream population…from that Mercedes driver.
This isn’t a “we are smart and they are dumb” kind of thing, either. That’s arrogant and stupid. Instead, we are talking about how well-rounded the FI community is and the depth of their understanding of how true happiness actually works.
Huge bummer about the lawsuit. Glad to hear all 2.5 loved ones were OK, but it stinks to have the accident come back in your face a year later. Some people.
I’m with you on both the stealth wealth and the online anonymity. Remaining anonymous matters a bit more, since I’m still working, and I’d rather not have my early retirement plan and finances well known around the hospital.
Who wouldn’t want lunch at a brewpub? I’m hungry & thirsty just thinking about it. 🙂
Cheers!
-PoF
So sorry to hear about being sued. This is never a good experience. Hope that the arbitration will solve the problem quickly and quietly. Would be a good thing if it did!
However, I can understand the owner, she is out of pocket due to no fault of her own. Mr. CF had the same thing with a new road bicycle, which I crashed into the side of a vehicle that was supposed to have yielded. Totalled the bike, but left me untouched. That being said, the bike was only 4 months old and I only got 80% back from the drivers insurance. In short, I was out of pocket about €200. Which was a lot of money as I was a student at the time. Now this is no amount to sue over, nor is this very common in the Netherland either, but in case of a $75.000 Mercedes, it kind of makes sense.
That being said, if you can afford and buy a $75000 Mercedes, you should be financially in a very good position (not should…..).
As for the Mental Age, it certainly will have with financial independence! If you act like a kid, your never going to achieve it, as you will buy a $75000 Mercedes. 😉
Sorry to hear about your bike. I definitely get why she’s doing it, I just don’t think it’s the right thing to do!
Hey Mr. Tako, we were just discussing your post after dinner and may have something for you to consider discussing with you lawyer. Not sure how the insurance system in the US works, but here in the Netherlands you have the option to select all-risk insurance coverage that includes payout of the new value for the car when in an accident, for cars younger than three years old (all-risk insurance + new value coverage option). Even if the accident was not your fault, the insurance coverage would compensate for the difference between the payment of the insurance company of the person causing the accident and the new value of the vehicle.
Considering your “opponent” had a new car, you may be able to argue that she took the risk of the monetary difference between the new value and the black book value of car by not insuring all-risk with that new value coverage. Thereby knowingly taking the risk that if she would get hit, she would loose the ability to buy the same car back without having to “invest” extra cash. End of case.
Interesting point! I’m not sure how it works either, but generally the insurance pays out the value of the vehicle and the owner is responsible for depreciation in most cases (I believe). I’ll have to check!
One of my coworkers got sued for medical expenses. Her insurance company took care of it, but it ended up affecting her insurance premiums for years. So make sure you discuss how it will affect future premiums.
Good tip! We’ll definitely do that!
Thanks for this excellent post. With regard to mental-age, financially savvy people probably have more ‘staying power’ and are more used to dealing with short term inconveniences than their less mature counterparts. Some people are just better at dealing with ‘difficulty’ than others.
For some, difficulty presents a challenge to be solved. For others, difficulty is just a roadblock to further immediate fun.
Sorry to hear about your car accident. Hope it turns out for the best.
I hope it turns out for the best too!
Hey Mr Tako, lots of good stuff in your article.
Firstly, getting sued really sucks. I’m glad we live in a country where suing isn’t so prevalent. My first thought was everybody should have an insurance policy that covers REPLACEMENT value. So if your house and everything in it gets flattened, you need it to be replaced, not necessarily a $ amount. Same with that lady’s car. Definitely her fault for not having the right insurance. What if she’d just crashed into a wall, written off her car. She can’t sue a wall.
I hope the cars you now drive have a nice high safe rating. The older cars are TERRIBLE for safety, which is probably why the air bags didn’t work at all. We are huge advocates for getting value, frugal, 2nd hand, shop at Aldi etc etc but when we bought our car a couple of years ago, it was a 2nd hand 2007 Mazda which had all the safety features to keep us both safe in an accident. We spent a lot more than we could have (like buying a really old car that would get us from A to B) but safety can’t be overstated.
Interesting thoughts about stealth wealth. We mostly think along the same lines and would prefer to keep our wealth for ourselves and blog readers. However, what will you say to people when you are retired early (how you did it)? Do you not give out financial “advice” to people when talking about that subject?
That family member you talk about sounds TERRIBLE. I’d hate to go anywhere with them. Sadly we are all stuck with the family we have (or marry into). I think FI people definitely need a grown up mentality, a mindset of steel to get it done (and not throw a tantrum if the situation isn’t perfect for them), we see the world for how it is. Some people get life handed to them and expect the rest of their lives to be like that. Use your willpower to CREATE a better situation for yourself, but do it whilst being mindful of other people.
Tristan
Beyond readers of the blog, I don’t openly state I’m financially independent. If they ask what I do for a living, I tell them I’m a “stay-at-home dad” or sometimes I tell them I’m “looking for the right opportunity”. If they inquire how we pay the bills or afford life, I merely say something to the effect of “we have investments and savings”.
You’d be surprised…people don’t ask questions after that! They probably think I’m poor or something. I typically wear a t-shirt, torn/worn-out jeans, and old shoes…not the uniform people would expect from a millionaire.
Interesting..what would you say if your wife didn’t work either (ie you’d made FI at an early stage)?
Tristan
I’ll let you know when I figure it out!
Good luck with the lawsuit. I have myself been threatened with a lawsuit by the same people who are suing MMM right now, for an article I wrote about their product. I took it down (even though countless lawyers have now confirmed to me nothing was wrong with the article) and I’m hoping they will drop it.
Yikes! Some people! Those guys seem kindof sue happy…
Getting sued is no fun because it appears that they will take everything. Sounds like your plan is solid and I’m glad you’re not too worried about it.
Whoa, sorry to hear about the accident and the lawsuit. Good luck with the arbitration. This seems ridiculous and the judge should throw it out.
I had a similar dilemma earlier this year when I decided to set up my own blog. I wanted to be able to talk frankly about my financial affairs without having to do the full Monty in front of my neighbours, so I decided to keep my identity and location to myself. Clearly I made the right choice!
Good luck with arbitration!
Thanks!
Sorry to hear about the lawsuit.
It’s interesting that you mentioned mental age and financial independence – actually there may be evidence for that! Check out “Standard marshmallow experiment” in Wikipedia. Those kids who chose delayed gratification(delayed but bigger rewards) tended to have better life outcomes.
Howdy,
I found your website through 1500 days. Glad everyone is ok after the accident, but I have to admit that kind of thing pisses me off. Maybe the driver is a lawyer and does this type of thing for fun…..Do you know how much your insurance company paid out for the Mercedes? According to her figures and the amount your being sued for it was only $15k, I can’t believe that the insurance company would take a $60k depreciation deduction for the vehicle. But my guess is that they paid more like $60k and the owner of the Mercedes wasn’t too happy about that, but where do they come off asking for quadruple that amount in a lawsuit? Ridiculous!
My dad (not a lawyer) worked in a law firm after retirement and from the stories he tells me, it is big business just to file these lawsuits to get the insurance companies to pony up more cash up to the max of the policy, they almost never go to court it all gets settled out of court and the attorney takes a huge cut!!
That is why insurance rates go up and there are hundred of advertisements on tv to get your lawyer now for any auto accident, motorcycle accident, bad drug, etc. etc. What is there to lose when they advertise, ‘there is no cost to you unless we get you money!!’
Totally agree with your stealth wealth comments and procedures….
Keep us updated on the lawsuit. Now off to read more of your new (to me) blog.
I’m not certain the initial payout amount – It was probably on the order of $60k. I don’t believe the insurance company disclosed that to us. So in total she’ll probably get around $100k+
That seems criminal….if she gets $100k and the lawyer gets their cut on top of that. What a joke!
I don’t think we’re under insured, we have a pretty standard full coverage policy. She’s asking $60k ON TOP of what she was already paid.. Her claim includes ‘injuries’.
Ouch, what a bummer. Thank goodness everybody is OK, and you have insurance to pay.
Also glad you’ve mentioned Stealth Wealth. It’s one of the central themes on Financial Samurai. Latest post was on Making Rich People Who Openly Declare Their Income To Pay More For Everything. That got a bunch of folks riled up, until they realized they are OK w/ a progressive tax system.
Does MMM practice stealth wealth? I thought he’s been pretty open with who he is and how much he makes ($400K+ from some interview recently). He has one of the best money making models out there so folks take note!
Sam
I agree with your thoughts on stealth wealth, but how do you reconcile that with early retirement, especially extreme early retirement?
For instance, if I am hit by a 45 year old guy who has no visible signs of wealth but then I find out he’s RETIRED at 45, then I assume he’s wealthy.
So are early retirement people more at risk for these sorts of issues?
Frankly, just don’t tell them you’re retired. We don’t disclose it to anyone.
Ok, I guess what threw me was the family members part. Your family knows you’re retired, right?
Only Mrs. Tako and the whole darn internet!