My Personal Finance Story Part 2:
I left off telling my story in the last post. Part 2 details some of the hardest financial times I’ve ever gone through, and the lessons learned.
Related: Read Part One here, about my “normal” money mistakes.
We were moving back home. “Life is but a dream”. We were humming right along. It was easy street for a while.
Because I grew up in Pennsylvania, I was on the lookout for an opportunity to transfer my job back to that area. When one presented itself, I jumped at the chance to leave New York (sorry current New Yorkers – it was never about the people).
The “Adulting is Hard” Years (Yrs. 9-11)
We had to sell our house. Just saying that brings back difficult memories. It was a frustrating experience, but we did finally sell it. We were able to roll the proceeds into purchase of a new house here in PA.
We had learned at least one of the lessons of buying a house. Put more than 5% down. We were able to gather a 15% down payment for this house. Because interests rates were low, we were able to buy a nice house in a great area.
To swing the 15%, we had to lower our savings account down to a little more than a months worth of expenses. But we were still living within our means. We were also expecting our third little blessing. That first 3 months after the house purchase were the calm before the storm.
Within 3 months of moving in (we moved in October), we discovered that our hot-water heater wasn’t working. Can you say cold showers? In January? My pregnant wife would have none of that.
Because the water heater was plumbed into our geothermal unit (which actually was a good thing), I called a local service company in to take a look. We ended up replacing the hot-water heater that day, because it was so corroded. That $2000 bill nearly emptied our depleted savings. Our daughter was born a few days later. The birth of our beautiful baby girl was certainly a blessing, but the financial “lessons” were just beginning.
A month later (February – still winter), the geothermal unit stopped working altogether. It was 25 years old, and replacing the broken part would have cost almost as much as a new unit according to the repair-man. The replacement cost? $9800!! Fortunately, he was able to bandage the unit together long enough for us to ride out the winter.
What would you do? Finance the new geothermal unit? We had only a few thousand dollars in the bank. If we would have had an emergency fund of 3-6 months of expenses, it would have been an easy decision. We could have replaced it immediately. But remember, we took out of our already inadequate savings to buy this house.
So we decided that we would bite the bullet and replace the unit without debt. Our plan was to save up as much money as possible to replace it in the spring.
With our plan in full effect, we had started to trim our budget to save the money necessary for our planned geothermal replacement. It was working – or so we thought. Until we had yet another setback.
In April on a bright and cheery spring day, while I was cleaning out the gutters, I noticed my roof. To be more specific, I noticed the lack of a roof. The stones that are normally bonded to the asphalt shingles were completely worn away. What I thought was a gray colored roof used to be brown. Not only that, but there were two holes in the roof big enough to put my hand through. I was sure that the next thunderstorm would rip the roof clean off! So I covered the holes with plastic, and prayed for sunny days! We needed a new roof quick!! – cost $8200.
Related: Do you need a new roof? I sure did!
Remember, we had already trimmed our budget to save for the geothermal unit. Now we had another $10k expense to save for. Life that was already stressful (with a new baby also), just became a nightmare. What was I going to do? I could have done without these life lessons.
I stopped contributing to my retirement account. I won’t lie. This hurt a little bit. I was losing an employer match, and also potential future growth. But I refused to go into debt for this crisis. I determined to tighten our belts so much that we would force ourselves to save money.
So we tightened our budget again. It seemed like there was always a little more we could squeeze out of it. But we weren’t finished dodging the curve-balls that life was chucking at us.
In May, my employer announced that all engineering jobs – including mine – were going to be re-located to New York of all places. My job was going to be eliminated at the time when I needed it most. The silver lining here (if there was one) was that these jobs were to be phased out over a period of time.
I felt like someone punched me in the stomach – literally. It was the worst possible thing that could have happened, at the worst possible time.
My “Money Epiphany” or “Aha” Moment.
We continued to save as much as we could. We cut our budget again. It was down to the bare necessities – mortgage, utilities, food, and gas for the car.
We sold our pop-up camper. I certainly wasn’t thrilled to get rid of it, but I still refused to take on debt. In the end, we had to borrow some from my family. It was the last little bit to get us over the hump. They certainly didn’t want their grand-kids to be cold through the winter. It took us 8 months of scrimping and saving to come up with the cash we needed.
Conclusions and Lessons Learned
We replaced both the roof and the geothermal unit that summer. It cost us $18000. Immediately after we paid my parents back, we started to build up a real emergency fund. Not only because my job was still in jeopardy, but also because I never want to go through that stress again. It took us another 6 months to completely fund our emergency fund.
Related: You need an emergency fund!! I did, and it wasn’t available.
If we had a completely funded emergency fund, those setbacks would have been blips on the radar. Life would have been much less difficult.
How often do we do things like this to ourselves? We are where we are, because of the choices we make.
Where are you now? Have you had an “Aha” moment and learned your lessons? Or are you still . . . “Life is but a dream”?