One Paycheck Away from Disaster

I've been fired once, and laid off once. I was out of work from January 2011 until November 2012 after being fired from a financial institution shortly after New Year's Day due to several errors I made. I was lucky that the company was found to have not given me sufficient training and was thus awarded unemployment insurance in the amount of $430/week, for a year. In my previous job, I'd been earning $41,000/ year, living in an apartment with a rent of $950/month I had $16,000 in savings. In addition, that year, I got a tax refund of about $3,000. I moved back in with my Mom who charged me $400/month in rent.

After my 2001 Nissan Maxima's transmission went kaput, I first tried to get it fixed. The car was worth $3500 and it was going to cost me $3000 to get the transmission fixed. When the tower came to collect the car, he asked me what was wrong with the car. I explained the problem with the car. He really liked this type of Maxima and offered me $300 for the car. I told him I would sell it for $500. He gave me a final offer of $400, which I took. From May 2012 until November 2012 I drove my mom's van, a 2002 Honda Odyssey. Surprisingly, I still got dates and had some interesting times in that car.

In October 2017, I was laid off from my job as a contractor for the U.S. Defense Department, where I'd been earning $63,000/ year. ($60,000 base salary + $3,000 annual bonus) I managed to live off of my savings from October 2017 until I exhausted them in July 2018. With only $20,000 in savings and expenses of $2500/month, it's very easy to see how I managed to exhaust my savings. I managed to borrow money to live on from family and friends for the next 3 months, which I paid back the beginning of this year.

This background now brings me to my main point. As Americans, we need to start spending less, and start saving more. I'd never imagined that I would exhaust that $20,000 I'd saved up because I never thought at the time that I would be out of work for more than 6-8 months given the state of the economy, my security clearance, and the fact that I have a Bachelor's degree. I was dead wrong. As you can guess, being laid off for a 2nd time was a big part of the impetus that pushed me to finally pursue entrepreneurship.

78% of U.S. workers live paycheck to paycheck. (Friedman, 2019) Read that again, 78%!! Almost 8 out of every 10 people in the workforce. This is not sustainable. As rent continues to increase year to year and our addiction to spending more than we save overall, remains the same year to year it is no wonder that personal bankruptcy is a common occurrence.

I volunteered to help feed some of our homeless fellow citizens, (customers as Our Daily Bread called them) at the Our Daily Bread Employment Center and Shelter in Baltimore in December 2014. As I spoke to the customers, I was amazed at how many of them had been people with good jobs, professionals such as accountants, doctors, lawyers, teachers, who become bankrupt and lost everything because of a major healthcare expense, divorce, or had been sued which resulted in them losing all of their assets. In addition, there were, of course, professionals who had been earning a lot of money and during that time lived beyond their means.

We need to start saving more, (me included) period! Spending drives our economy and creates jobs, there is no doubt. However, as consumers, we need to strike a balance. We can't spend into oblivion. We can't spend at the expense of our family's stability and financial security. Let's save more!

Kubvo/Patrick

References

Friedman, Z. (2019, January 11). 78% of Workers Live Paycheck to Paycheck. Retrieved from Forbes: https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#6922df2b4f10

References

Friedman, Z. (2019, January 11). 78% of Workers Live Paycheck to Paycheck. Retrieved from Forbes: https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#6922df2b4f10