The Realities of Trying to Live on an Emergency Fund

You’re brokesurrounded by crisis and everyone is depending upon you to make it through one of the worst experiences of your life. 

You can’t sleep, you can’t think, and now the last dollars you have in your life/emergency fund are gone. This is a reality for too many families.

I Thought I Had Saved Enough

I sure hear this statement a lot. Mainly I hear it with people and their retirement and a few days ago I heard it for a family’s emergency fund (I don’t call them emergency funds – here’s why). This family had six months saved but dipped in and used a little for a house purchase so they were down to what they thought was three month supply of moneyIt didn’t last them one month.  They spent too much of their savings because they wanted to avoid becoming house poor.

You know what I have never, ever heard in my life. Why did I save so much money?  I have way too much money.

Sometimes we try to find the minimum amount we need to set aside for expenses. That is a good start, but what about going above and beyond to have that extra life comfort? Is having extra money a problem?

Predicting Your Emergency

How do you know how much to save for life’s situations? I mean many places give you estimations of how many months to save for, but this isn’t a diamond ring for your engagement where they tell you 2-3 months. This is survival.  We need to be focused on having more than less or even the minimum.

When It Rains, It Pours and Pours and Pours

So this family I was asked to help check in on had saved a lot of money, nearly six figures because they were making the jump to a new house. They had a nice house but it was really small for an expanding family that now has multiple teenagers. They finally decided the time was right and made the jump.

Friday they moved to their new two-story home on the golf course. Monday when the husband/dad returned to work he was let go at work. Talk about a punch to the gut. Two days later the husband was involved in a 6-car crash on the interstate and was the last car that pushed the cars into the other vehicles.

Life pretty much sucked and couldn’t get worse.

it Got Worse – All Out of Money

They had $6,000 for their emergency fund which they thought would last, but with the house payment, a larger-than-expected utility payment, moving expenses, and medical bills from the car crash, it was gone in three weeks.

They had gone from the happiest day of moving in and starting new to crashing down instantly.

Compound Tragedy

When something goes wrong everything seems to go wrong. That is why I don’t think we can just plan for one event. You have to plan for everything to go wrong. Plan for job loss and all income with something else unexpected on the side. Then plan on family suddenly cutting you off and not giving you one penny. It was hard enough even thinking to ask family but they turn you down to make matters worse.

Often when we are in a bad spot we start making very poor decisions because of despair, frustration, and depression. Over time the depression causes you to stop putting all your time and effort towards fixing the problem or finding employment or income.

How This Family Survived The Fall

It wasn’t easy. A few days after the car crash the husband was in the basement putting some boxes away from the move and a mirror fell out of the box and shattered and he got a nice chunk in his forearm. What else could go wrong?

He finally slowed down and told me he went into the mountains one day just to clear his head. The home was too chaotic and he went up to be alone. He spent time just relaxing to calm himself down. Then he pulled out a piece of paper and wrote down what needed to get done.

  • Stay positive
  • Find work – apply and work at least 8 hours each day at finding full-time work
  • Help wife and kids
  • Build up savings again

Where to Get New Income

He began applying for jobs but didn’t hear anything. He wasn’t in a business that was too hard to get new work since he was a large machine driver for construction.

They had some food in the freezer and down in the basement that they used to get through times. The meals weren’t glamorous, but it was enough to survive.

He spent his time every day applying to at least two jobs an hour so he could apply to at least 15-16 a day. Some days were better than others. Within a month he had seven interviews but only one promising lead. He was offered a new position after one month of looking which is very lucky. The pay was much less but the hours and fixed daily schedule were better. Another downside is he needs to wait another month before starting work again.

Surviving on Credit Cards

They have no other option at this point than credit cards. Cash and savings are gone. They are just trying to survive and are just putting groceries on their credit card. The wife picked up a 2nd job (her first was only bringing in minimal money for a few hours worked each day), but that doesn’t start for two weeks.

I know many people who consider credit cards to be their “emergency plan.” Why save up $1,000 when my credit card has a $5,000 limit?

Family Life Lessons

The teenagers have actually been some of the strongest support in the family. They have tried to help out as much as possible by babysitting and cutting lawns. Granted there are people in far worse situations that go a year or longer without work.

The teens lowered their expectations and didn’t make life any harder for their parents. While it is really painful right now, going through this as a family is a huge lesson for the kids about how fragile life and money can be. Sucks right now, but they will be better, in the long run, going through hard times.

They also realize with the income being much smaller than in the past that they will need to change some of their expectations on vacations, clothes, and other things that were easy to obtain in the past. Now things are tight, but at least there is income and work, and optimism in the future.

All of it could have been avoided if they had prepared a little more for life.

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