Editor's note: Lisa Jessie is an accountant and former news editor who lives and works in Louisville, Ky. She offered to lend us this essay from her own blog about the changes in her own financial life, and we gladly accepted. This is a terrific cautionary tale that perfectly illustrates why it is so crucial to pay down debt and save money. You never know what's coming down the line.
By Lisa M. Jessie
“Lisa, we need to talk.”
When you hear those words from a romantic interest, you know what follows will be bad. When you hear it from your boss, it’s worse.
Three and a half years ago, I found the most perfect job I’d ever landed: a flexible schedule, a casual work environment, incredibly pleasant co-workers and good pay – even if the fringe benefits were small. But two weeks ago, I found out that I would join the ranks of the unemployed at the end of May.
I’m 41, and I have never been unemployed or – knock on wood – fired. This experience, while not unexpected given the dismal economy, has been surreal. Still, aside from a few tears shed at mid-day and good cry when I came home, I’m surprisingly calm. In some ways, I feel a bit liberated. The workload has been slowing since late 2007, but because of the great work environment, I hesitated to leave. Then the amount of work dropped off precipitously in the last few weeks. In fact, I began updating my resume the night before I got the bad news – because I couldn’t face a summer of surfing the Internet for seven hours a day.
I’m also calmer because more than a year ago, I committed myself to improving my personal finances. While I’ve never been credit junkie or a shopaholic and have always been fairly responsible with money, I tend to be more of a spender than a saver.
But when I turned 40, I paid off all my debt but my mortgage. I paid off the car loan a few months early, the student loan a year or two early. I moved my credit card balance to a card with a lower fixed rate and paid off the balance. To accomplish these payoffs, I made myself think twice before I bought things, mailed in bigger-than-normal monthly payments and wouldn’t allow myself to charge anything. If I couldn’t pay cash, I postponed a purchase – or gave it up all together. I told myself how great it would feel to have the cash flow to debt redirected to my checking or savings account. For my New Year’s resolution, I vowed not to charge more than I could pay off in full at the end of the month. Amazingly, the resolution has been far easier to keep than my annual vow to lose weight.
I had already automated my bill paying and saving, but I knew I needed to build an emergency fund. I did have some savings, so I committed myself to keeping my hands off that account unless it was for major car/home repairs or an unexpected medical bill. I’ve made it to about six weeks’ of expenses, which I think I could stretch to eight to 12 weeks if I supplement it with either a temp job or unemployment benefits. I will also get severance, so I feel confident that I can make it through the summer and maybe part of the fall.
However, as it turns out, I won’t need the emergency fund. I've got a job lined up. Simply preparing my resume, networking and searching mitigated my fear and my feeling of helplessness, and so did having my finances squared away. I also know that when I have faced career challenges in the past, I emerged from the dark days stronger, better and wiser. I’m confident this time will be no different.