We're One Step Away...
Posted on February 28, 2006 by Him and tagged emergency_savings
I ran across View From the Sidewalk (via Digg) today during my morning reading. It is a blog of Michael Brown, a homeless man living in the streets of Greensboro, NC, blogging from the public library after being evicted from his home. His views are fresh and quite frank. He is what everyone does not want to become. He is what happened when life threw curveballs. From his blog:
As the prospects for good jobs went down (by good, I mean a job that would pay me enough to catch up my bills, keep them up, and allow me to put a little away on the side to prevent financial emergencies from becoming overwhelming. In other words, just about anything above subsistence wage), my debt went up, to the point where the rent fell behind. And farther behind. And farther yet. I'd kept one or two steps ahead of the wolves as long as I could, but in January of this year, they finally caught up with me. I was taken up for eviction and my landlord wasn't willing to work with me anymore.
There are a multitude of articles stating that most families are only one financial catastrophe from becoming bankrupt, or worse, homeless. It would only take one of us to lose our jobs to be on the road to financial ruin, if both of us lost our jobs (heaven forbid), we would definitely be in trouble. You would never know that looking at me sitting in my office overlooking Chicago's Millennium Park, in my Banana Republic clothes, sitting in my Herman Miller Aeron chair.
We are playing a game. We are taking huge risks. Our emergency fund consists of a combination of our retirement funds, credit cards, our wedding fund, and the hope that we don't both lose our jobs. We are only one financial disaster from blogging from the street.
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Emily | Mar 1, 2006
They say that unless you are Bill Gates, you are just one major illness or job loss away from bankruptcy. Very scary! In Australia, the debt situation has gotten so bad that they are considering putting health warning labels on credit cards, just like the warnings on cigarettes and alcohol -
http://www.creditbloggers.com/2006/03/cigarettes_alco.html
Trust me, I know about this. I am a single parent with 7 kids (long story, it's on one of my blogs). I work from home, but my income is below the national poverty level. I have had to live on credit and now my minivan broke down on Monday.
People can't believe how insane my life is and how I keep an optimistic outlook on life. But I have been in worse situations. My optimism beats being in an abyss of depression. My kids need me to be able to function. I don't have the time to wallow in a pity party.
I blog to let people know that some people have to live like this and we make it work. Divorce and broken families usually produce poverty and
unfortunately, it happens everyday.
That frightens me. I have written about many people who were just fine until someone got sick, divorced or died. I myself look great in Banana Republic shoes, but if I missed a single paycheck I couldn't pay the rent -- without running up the damn credit cards.
This is precisely why my goal right now is to beef up my cash cushion! My industry has seen a lot of bankruptcies in the last 10 years so I want to make sure I'm covered. I have skills that will travel to other industries, but I don't yet have a reason to move. (knock on wood!)
Jay Gatsby | Mar 4, 2006
I agree with mapgirl. In fact, I'll go a step further. You should refrain from purchasing anything and everything you can hold off on purchasing until your cash cushion reaches at least 12 months worth of expenses. Quite honestly, you don't NEED the following:
High-speed Internet at $50+ a month
Cable TV at $50+ a month
2,000+ cell minutes at $60 a month
New car at $400+ a month
Starbucks at $60+ a month
New clothes at $200+ a month
The list goes on and on. I don't have any of the foregoing expenses (and have never had some of them), and as result, I've built up a substantial cash cushion and investment portfolio in case things go terribly wrong.
Don't take this comment as meaning that I think I'm better than you; rather, only that my priorities are different. My priority is to become financially-independent, and it requires sacrifice of many non-essentials.
Kim | Feb 28, 2006
Kinda scary when you think about it, huh? I think we have a tad bit more of a cushion but with a house, 2 cars and 2 kids, that probably about equals out and would get swallowed up awfully fast. It's something you want to keep reminding yourself of when the desire to go on a shopping spree arises (as I sit here in my 5 year old sweater).
Keep up the good work on your blog!
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