Six months ago I was flying high. My wife and I came back to our birth cities after spending a year on-island in Hawaii. The grass was looking extremely green.
We used the proceeds from the sale of our last home to put a nice down payment on a large 3000 sq ft house in a nice neighborhood. Rather than paying $4000 to ship both vehicles back home we decided to spend $1000 to rent a car when relocating from Hawaii and we would both buy newer vehicles when we got back to our "home town". I bought a new truck (instead of keeping the few year old truck) and she bought a new car which she needs to get around for work. We were finally feeling financially sound and decided to have a child. My wife was waiting for her job to become available with her old company so she had a few months off but eventually went back to work in September,
Then it came, the infamous call on the drive home from work from my consulting agency stating that the contract would not require my services any more. I was fired...well laid-off technically.
Here we were, two high-flying professionals who just bought a house, 2 new cars and my wife was pregnant.
The perfect storm.
Buying a new home, 2 new cars and gearing up for our first child depleted our savings...well almost.
Somehow, some way after these massive purchases and a complacent view on our futures we found ourselves sacrificing in ways we weren't used to.
Thankfully my wife had some money saved in her account,($4000) and I had some money saved in mine ($2500).
Fast forward four months later and I am finally gainfully employed after passing up the first (and only job offer) I received. We have about $4000 saved after I burned through a bunch of unemployment benefits, all of my savings and some of my wifes.
Now comes the hospital bills from the delivery and birth of our new child. They total about $4000-50000 after insurance. Thank GOODNESS for the insurance or they would be much more than that, roughly $20,000-25,000 in hospital charges were submitted to the insurance company for less than 3days in the hospital.
We get a 10% discount if we pay a majority of the bills in full, which is about a $400 savings. Our accounts will be empty when we are done paying the hospital bills. The bills we have leftover will be paid by my wifes taxable brokerage account that I had bought some AAPL and UNP stocks in prior to our relocation andy anything else is going on a 0% 18month credit card.
Now it's time to start building up our emergency fund again.
My point of the story is, even with four months of emergency funds the perfect storm can come along any day and drain you in less time than you may thing.
My dad is impressed at how we managed to "hand in there" without having to borrow money. I am just thankful we had a decent emergency fund after four massive financial events within the past six months.
Two critical facts that prevented our financial collapse were
1.) My wife carried the health insurance that covered most of our medical bills AND
2.) I did not get fired, but was laid off and had worked as a full time employee long enough that I qulified for unemployment insurance
Had I been fired, or had we not had health insurance we would be in debt...instead our investment accounts and retirement accounts have essentially remained unchanged experiencing some small growth in a pitter putter market this year.
Let this be a lesson for those who don't think they need an emergency fund.
For those with no pity, I understand I could have sold both vehicles, eliminated some monthly debt payments by doing so and then bought vehicles again later when we got back on our feet but I learned after moving from Hawaii that it will cost quite a bit in taxes and registration every time you buy a vehicle.
For those who can sympathize, We haven't missed a single payment for any of our financial obligations and we are now getting back on our feet.
Now it's time to weather the daycare payments.