February 18, 2020

Save For a Rainy Day - My Story

If you have been around any parent or grandparent long enough, an old adage will likely be said - "make sure you save for a rainy day." This common saying crosses generations and cultures and is a premise for wise living. My grandparents lived through the Great Depression in the dust bowl, and knew what it meant to live in poverty - and to make life work on next to nothing. I wish I could say that as a result of their sage advice I never spent a dime I didn't need to; but I will say that their input helped to get me through one of the more difficult times of my career and financial life.

In early 2019, my wife and I sold our "starter" home and upgraded to a space that fit our growing family - a process I talk about in another blog post. Our prior home was 1,000 square feet for a family of five, and worst of all - only one bathroom. We took time to evaluate the best decision for us, and we finally found the home in our neighborhood that we wanted. Without a doubt, the higher price of the home (and higher monthly payment) did give us some sticker shock, my career felt solid so I didn't think we had much to worry about. I loved my job at the time (before I became a loan officer) and felt very established, confident that the path ahead was stable. I was the breadwinner of my family and proud that we could close on a much larger home. We closed on March 15th.

The call came on April 22 - only 38 days after closing on our new mortgage. Technically, we hadn't even made the first mortgage payment. I had finished a great day of work when I got the dreaded call from my boss. My position was being eliminated, not due to performance but due to a nationwide restructuring. To say my world was turned upside down was an understatement; I went from hero to zero with our finances in a hurry. I have no ill-will toward my former employer, if for no other reason I have found a career I love in the mortgage industry. It took many months for us to figure out our next steps, with a sometimes-rocky path. We are fortunate that we had a small "rainy day" fund for such an occasion, which we never hoped to use. As a family, we tightened down and did everything we needed to in order to put food on the table, pay our mortgage, and run the AC on muggy July days. Were it not for a small emergency fund, it could have made a significant difference in our recovery.

This post isn't geared toward my job loss, as much as I'd like it to be helpful for anyone who has a sudden, unknown event on the horizon. The truth is we usually can't see unexpected events on the horizon that have a significant impact to our family finances. Job loss is certainly one, but other factors like health emergencies, car troubles or natural disasters all impact the need for a rainy day fund. The suggestion for the size of emergency fund varies, but this article from The Balance does a great job of breaking down recommended levels. No matter the size of your fund, make sure you have reserves set aside to protect your family from unexpected events, from someone who has lived through it firsthand.