Most of us have heard the aphorism “when life gives you lemons, make lemonade”. Well, it’s now time for us to make some lemonade. Last Friday I lost my job and was among 120+ others who lost their jobs as well. This happened because the parent company I had worked for was acquired by another company, and they decided to reduce costs by outsourcing the entire finance department to India. Although it doesn’t seem fair, it would be hypocritical of me if I became upset with this where so many of us rely on the profits of this company to increase our portfolios. This is simply corporate America being corporate America.
At least I made my exit with both grace and dignity, plus, I was grateful to have been issued a generous severance package where I had worked there for almost a decade. So many people allow their emotions to take control, which is understandable of course, but in business or life in general, I have always maintained the belief that you should act like a professional at all times, and keep your head held high. After all, you never know who is connected to who or where your next opportunity will come from. This last job came from a lead I was given by a former employer I had worked for in another state, and where it’s a tough job climate, I am going to need every resource I have available to find another position of equal measure.
Okay, now that I’m done grumbling about my job loss situation, it’s time to grow up and act like a big girl and focus on the future. So allow me to share with you where we currently stand.
As we discussed in our post “Why We Don’t Have An Emergency Fund“, we have a few sources where we can draw cash from if needed, and despite the job loss, we still don’t believe it’s necessary to have a dedicated fund just for emergencies. Below is a brief overview of what we have available to us.
- Checking – We keep well over a year’s worth of expenses at all times.
- Credit cards – We carry credit lines of more than $20,000 on each of our credit cards.
- Taxable brokerage account – We would need to sell some assets, but we don’t believe that it will come to this.
The balance we keep in our checking is enough to cover our expenses for more than a year if we were to both lose our jobs. This little nest egg took us a while to build, but we can sleep well at night knowing we have this. We don’t mind leaving it in checking because the interest rate is comparable to a savings account or CD. Even if we were losing out on some interest, I still prefer to keep the number of accounts to a minimum so our finances are easy to manage.
We also have the option to use our credit cards. This is one that we will do our best to avoid, along with selling our assets in the taxable brokerage account. We honestly don’t see our situation getting to this point, but it’s there if we need it.
For the last couple of years we have been living off of Mr. FE’s salary and saving mine. Even with the loss of my salary, we should be able to continue to do this; especially where we are already programmed to live below our means. How did we do this?
- First, we purchased a lower priced home. We didn’t feel the need to buy a home that matched our income level, or the absurd loan amount the bank approved for us to have for that matter. We knew that we wanted an affordable home that we could live in, and not live for. We also picked a home based on location so we could save money on transportation. We accomplished this nicely with Mr. FE’s 2.8 mile commute!
- Second, well if you’ve seen the sad car we currently own that we refer to as “The Turtle”, then what I am about to say next won’t surprise you. Neither one of us care if we own a souped up luxury ride that can send signals to outer space. We just require the basics to get us from point A to B. We are talking about a depreciating asset here folks!
- Third, we keep a close eye on our budget. We eat most of our meals at home and the majority of our entertainment is free. We won’t count Mr. FE’s insistence on having cable TV, but you get the point.
The loss of my salary will have a major impact on our savings rate, however, our day to day living will most likely remain the same.
Since we’ve adopted a frugal lifestyle, we have both gained confidence in our ability to survive these temporary financial setbacks. We will continue to stay on the path to financial independence, and know that by living frugally and managing our finances wisely, we have been rewarded with the most important thing of all, peace of mind.