My Personal Finance “Aha” Moment

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I’ve been writing about personal finance for the past 4 years, and I’ve lived it in varying degrees throughout. At first, the blog and my personal finance style were all about spending but saving by getting deals or freebies. Over time it evolved into saving for retirement, paying off my student loans, car, house, building an emergency fund, and even branched into minimalism and living a simple life. Even though I was more than 3 years into my personal finance journey, one of my biggest “aha moments” didn’t occur until just last summer, almost exactly a year ago.

I started 2015 by taking a risk. I took a pay cut and left a secure job in a good field to pursue my dream job in an entirely different field. It was a calculated risk: I was almost debt-free and had a good amount of emergency savings. I did my research and was certain that this career was what I wanted.

Unfortunately, it didn’t work out. Six months later, in the summer of 2015, I found myself unemployed.

This was my aha moment: Everything I’d been blogging about for the past three years…it was time to practice what I preach and put it to the test.

I did eventually start to receive unemployment and had some compensation for a military disability rating. Still, otherwise, that was it: A house to pay for but no true income, no spouse bringing in additional income, and no family nearby to fall back on if things got terrible.

Fortunately, I had a few things working in my favor:

Emergency Savings

My goal had been to get my emergency savings up to $20k, but they were only around $15k when I lost my job. It was still better than nothing, enough to give me some peace of mind while I pounded the pavement looking for jobs. Fortunately, I only had to dip into emergency savings a few times and quickly put the money back.

Very Little Debt

My recent goal had been to pay off my car, and I was able to complete that earlier in the year. The only debt I had during my time of unemployment was my mortgage. I could not imagine having to pay for a mortgage, car payment, student loans, or credit card debt on top of my monthly expenses during this period.

Low Monthly Expenses

In part because of the lack of debt mentioned above and the financial habits I’d developed over the years, I had meager monthly expenses. No gym memberships, expensive cable, debt, and so on. We all have our “things,” and mine are books and coffee, which were easy to put on pause for a while. Having low monthly expenses allowed me to stretch my unemployment dollars a little farther and know that my emergency fund could last several extra months if needed.

Minimalism

I really started getting into my minimalism journey at the beginning of 2015, and by the time I lost my job, I was far enough into it to have realized that it takes very little to make me happy. I had realized that I don’t need money or things to have fun and enjoy life. I had a bike to ride, a dog to walk or take to the park, and a library full of books to read out on my deck. All the makings of a nice summer!

While it may seem like minimalism is the least personal finance-related item on this list, it’s actually the thing that has had the most profound impact on my financial situation and perspective. It has completely changed my view of money, material possessions, and what brings me joy. That has allowed me to feel free truly, and that has equated to some serious financial savings.

Feeling Empowered

In the end, I was unemployed for 3 months. I borrowed from emergency savings just a few times. Overall, I made out ok, but I learned a big lesson. All the work I’d put into getting my finances together, paying off debt, building savings…it was worth it. My period of unemployment was exactly the reason why I have worked on my finances. A good financial picture is like having insurance or a fire extinguisher…you hope you never need it, but you still want it there just in case. When you need it, you need it.

Having a financial plan allowed me to take a risk and allowed me to chase a dream. Even though it didn’t work out, I wouldn’t change the experience. I’m grateful for the chance, and I would not have bounced back as easily if it weren’t for my financial picture. When I’d rather buy more books than move money into savings, I think back to the summer that I put my finances to the test and how secure and empowered I felt when things fell through.

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