Are You on the Path to Financial Ruin? 4 Financial Ticking Bombs and How to Diffuse Them

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Unlike the wealthy, most have little to no safety net to weather events in life that could take the legs out from underneath you, sending you spiraling into financial ruin. In my Rich Habits research, I studied the habits of 128 individuals living in poverty. Some of those poor individuals were driven into poverty unnecessarily due to certain life events that they were completely unprepared for. Life sometimes has a way of throwing us into the abyss. Below are four of the most common life catastrophes and the strategies I uncovered in my research that act like a ladder, helping you climb out of your abyss, in tact financially.

Death of a Parent

Today, most households need both parents to work in order for the family to survive financially. When one parent dies unexpectedly, the emotional suffering for the children and the surviving spouse can be almost unbearable. The heartache families experience in dealing with a loss of a parent and spouse is hard enough, but couple that with the loss of that parent’s income, and that’s when life starts to unravel. No longer able to afford the home you and your children live in, you are forced to uproot your kids from their friends, school and environment, which fuels the emotional firestorm already raging in their lives. If, prior to the loss, the family was eking by, now your children will experience poverty for perhaps the first time in their lives. The emotional scars from the loss of a parent, exacerbated by the financial trauma, will alter the course of the lives of your children.

While the emotional devastation of a loss of a parent or spouse is unavoidable, the financial ruin is not. This is why life insurance exists. Its purpose is to replace the loss of earnings when a loved on dies. The amount of life insurance each wage earning parent should have can be easily determined. Just divide that parent’s income by 5%. Example: Mom earns $50,000 a year. $50,000 divided by 5% = $1,000,000 in life insurance. If Mom were to die unexpectedly, that $1 million, even if it is put into a non-interest-bearing checking account, will help your family get through 20 years without a parent. If you do invest that $1 million conservatively and it generate 1-5% of income per year, then that money will last longer. Life insurance is a ladder that will help you climb out of the abyss caused by the death of a loved one. The more life insurance your loved ones have, the sturdier the ladder, which puts you on sounder footing, making your climb out of the abyss less difficult.

“But I can’t afford life insurance,” you say. The cost of term life insurance has dropped significantly over the past twenty years due to increases in life expectancy. If it’s still too expensive, than you need to cut back on other things in your life. If you’re a wage earning parent whose family is just getting by, you absolutely must have life insurance. Those who don’t, expose their spouse and children to potential financial ruin.


Two out of every five individuals, at some point during their earning years, experience some type of disability. Occasionally, the disability is permanent, meaning you will no longer be able to work. Although the emotional pain to the family is not as great as a death, the financial implications are worse. Not only do you lose the earnings of a disabled spouse and parent, but the costs related to providing for the family are greater. With a permanently disabled spouse and parent, the surviving spouse has one additional person to provide for, plus out of pocket medical costs associated with the disability.

This is why long-term disability insurance exists. It’s purpose is to replace the lost income of someone who becomes disabled. Most standard policies cover a minimum of 60% of lost wages. As the income replacement percentage increases, the cost of the policy increases. Because the incidence of a long-term disability event is statistically more likely than a loss of life event, long-term disability policies are even more important to have, than life insurance, for each wage earning parent. Once again, if you’re a wage earning parent whose family is just getting by, you absolutely must have long-term disability insurance. Those who don’t expose their spouse and children to potential financial ruin.

Job Loss

Many are still reeling from the devastation wrought by the 2008-2009 Great Recession. Although the unemployment rate has dropped, the quality of jobs has fallen. Nearly 20% of those who have been able to find jobs, post-Great Recession, are earning a fraction of what they were earning pre-Great Recession. This reduction in earnings has resulted in an explosion of those who are living at or near poverty. Home foreclosures are still affecting families, who are being torn apart financially.

Thanks to my Rich Habits research, I uncovered a strategy that non-wealthy individuals can exploit to help them mitigate the financial abyss that a job loss can create. Creating a second stream of income is a strategy that acts a lot like insurance in that it provides a source of income during the job loss period. This second stream of income can be a part-time job, a hobby that generates income or a side-business. Many of the self-made millionaires in my study actually became wealthy by virtue of starting a side-business while employed, which, over time, morphed into a full-time business.

Line of Credit

Death, disability or a job loss can occur at any time and result in financial ruin for those just getting by, if you do not have strategies in place to deal with each particular event. If you are in that position right now there is one last strategy available. It’s called an individual line of credit. If you have a home with equity, it is prudent to have a home equity line of credit. If you don’t have a home with equity you’re not at a dead end. Banks have only recently begun to market lines of credit to individuals. Individual lines of credit are intended for the same basic purpose as business lines of credit – to come to the rescue to help you meet expenses when you need to the most. The strategy here would be for each wage earning parent to secure their own individual line of credit. In the event of a death, disability or job loss, the line of credit will help put off financial ruin and buy you time to figure out a longer-term solution.

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Thomas C. Corley About Thomas C. Corley

Tom Corley understands the difference between being rich and poor: at age nine, his family went from being multi-millionaires to broke in just one night, due to a catastrophic fire that destroyed his Dad's thriving business. For fourteen years they struggled with poverty. There were eleven in Tom's family, and they lived in constant fear of losing their home.

Driven by the desire to unlock the secrets to success and failure, Tom spent five years studying the daily activities of 233 rich people and 128 poor people. He discovered there was an immense difference between the habits of the rich and the poor. During his research he identified over 300 daily activities that separated the “haves” from the “have nots.” Tom decided to write a book to share what he learned. That book, Rich Habits: The Daily Success Habits of Wealthy Individuals (1st Edition), went on to become an Amazon Bestseller in the United States forty times over a three year period. To give you some perspective, in order to be a true Amazon Bestseller in the United States, where you actually receive a specific Bestseller designation from Amazon, you need to be in the top 100 of all books sold by Amazon in the United States in a given day. Rich Habits did that for nearly thirty straight days, rising as high as #7, eclipsing such Bestselling authors such as Stephen Covey, Robert Kiyosaki and J.K. Rowlings. Imagine that - an unknown, first-time, self-published author selling more books than J.K. Rowlings!

Tom now travels the world, sharing his Rich Habits and motivating audiences at industry conferences, corporate events, universities, multi-level marketing group events, and global sales organizations’ presentations and finance conferences. He has even spoken on the same stage with famous entrepreneurs and personal development experts, such as Sir Richard Branson, Robin Sharma, Dr. Daniel Amen, and many others.

Tom has shared his insights on various national and international network, cable, and Internet television programs such as CBS Evening News, NBC News, Yahoo Financially Fit,, India TV, Australia, and a host of others. He has been interviewed on many prestigious nationally syndicated radio shows, including the Dave Ramsey Show, Marketplace Money, and WABC.

Tom has been featured in numerous print magazines—such as Money magazine, Inc. Magazine, SUCCESS Magazine, Entrepreneur magazine, Fast Company magazine, More magazine, Epoca Magazine (Brazil’s largest weekly) and Kiplinger’s Personal Finance magazine—and various online publications, including USA Today, CNN, MSN Money,,, and the Huffington Post. Tom is a frequent contributor to Business Insider,, and a few other media outlets.

National publicity has garnered international media attention for Tom and his Rich Habits research spanning 23 countries. Broadcast media, online publications, and television throughout Asia, the South Pacific, Europe, the United Kingdom, and Central and South America have shared his powerful message.

In an effort to help parents, grandparents, teachers and adults become success mentors to the younger generation, Tom released his second book, Rich Kids: How to Raise Our Children to be Happy and Successful in Life in 2014. This book was the self-help category winner of the 2015 New York Book Festival and Runner-up in the prestigious 2015 Writer’s Digest Self-Published Book Awards Contest. In 2016 Tom released his third book, Change Your Habits, Change Your Life. This book provides the latest science on habit change as well as more of Tom's unique research on the specific habits that helped transform 177 ordinary individuals into self-made millionaires.

Besides being an author, Tom is also a CPA, CFP, and hold a master’s degree in taxation. As president of Cerefice and Company, CPAs, Tom heads one of the premier financial firms in New Jersey.
Phone Number: 732-382-3800 Ext. 103.
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