Personal Finances, Recession, and Cash Flow

I don't know about you, but I'm tired of silly season. I'm going to blog today about something a little closer to home: Family finances.

As I announced a couple of weeks ago, next week I start a shiny new job that will significantly increase my income. This in the midst of worsening recession, I consider myself incredibly fortunate. But.

Here's the thing. I leave my current job tomorrow, and will get paid for a little over a week on a bi-weekly schedule the first friday in April... so my cashflow will be a little short changed. Not a big deal, right? Except that my first paycheck in my new job is several weeks down the line, and Elwood has jury duty this week. Why does that matter? Because his employer, like many small businesses, does not pay for jury duty. And jury duty pays $6/day in the jurisdiction Elwood is serving. He got chosen for a jury on a civil case that is estimated to take all week. Needless to say, not happymaking. On top of that, I did something stupid and need to take care of something mucho pronto. (Okay, well, at the start it was my kid who did something stupid.... he left the door ajar and our escape artist dog got out and leaped the fence so I got a ticket for an unrestrained dog. What I did that was stupid was misread the court date and think it was April and not March. Fortunately, I have a lawyer, and he's used to me being stupid... but paying for this is eating into an already tight money situation).

This is not a solicitation of funds. I have ways and means, and credit. I am also about to leap a tax bracket. What this is, is a commentary on how easy it is to stretch yourself out too thin and put yourself temporarily into monetary reaction mode.

I am cash poor right now due to several decisions, some of which were good decisions, some arguably not so good. For instance, I don't have $25K in the bank anymore because I used that money as partial means to support myself and my family while getting my MSW. Probably a good decision, in the long run. We stayed cash poor after graduation because we were (much too slowly) paying off medical bills, which, unfortunately, had new arrivals last year due to a chronic pain issue. We probably should have put more money in our emergency fund (which tended to hover at about $700), but we didn't. We lived a little larger (ate out a couple times a month) instead. I blew out the emergency fund, against Elwood's wishes, last month, in order to buy Darth Nacho a laptop for his 18th birthday. Probably an extravagant gift, but I just plain wanted to do it, and didn't have to use credit to do it, so I did it.

So I'm cash poor right now. I have a house full of food that keeps, thanks to some major shopping I did last week (we keep a chest freezer full of game and other frozen foods in addition to our regular refrigerator/freezer). I have enough cash for gas and food I might need to pick up in the next couple of weeks. I pushed a couple of automatic bill payments back a couple of weeks, and I'll be okay, with no impact on credit... unless something else goes wrong.

See, even there I'm in pretty good shape. While not great, my credit is on an improving arc, not a downturn. Even if in this short period of time, I have to take a "30 day" payment blip, in a year, my credit still will have improved, and my emergency fund will be both larger than it was and growing. The health care plan I will be getting at my new job (after 30 days, during which I'm still covered under my husband's plan), is about as good as a health plan gets in this economy. Because I will be working for a hospital system, any procedures I get that are performed at any of their locations are free -- on top of a fairly robust PPO, dental, and vision care. If I were to have to borrow money from "extra-credit" sources, I have several family members in good shape that could help out.

In other words, there is no monetary crisis now or pending in the O'Danu household, barring a major accident or illness before my short- and long- term disability plans kick in at my new job. (And wewt! I'll be able to afford term life insurance again). I'll even be able to afford to help pay my oldest son's tuition at college next year (granted, community colleges are still affordable, but still...)

Go back over what I just wrote and count the vulnerabilities. There are a number of places where if I had no personal "safety net", I would not be able to count on institutional systems to help. I'm pretty solidly middle class. Elwood and I between us are pushing a six digit income, and we'll pass that line shortly. We and the bank own our house, we have a fixed rate mortgage, and our mortgage payment is very affordable -- and yet.

We are still living hand to mouth. The decisions we had to make to increase our incomes to where they are now required that we go into significant debt (between us, $75k in student loan debt, plus lost opportunity wages while each of us went to school). It will be at least a year before we can build up a "three month expenses" safety net, and at least two before we have a full year's safety net. It will take about two years to pay off all our credit card and medical debt, and another five to plow out our mortgage and student loan debt. All while paying for and saving for college for our kids. And then? Home free, baby, saving for retirement. Unless something goes wrong.

Both Elwood and I have "recession-proof" jobs. There is always a need for social workers, and it can't be outsourced to India. The same is true of commercial HVAC techs. Restaurants need to keep the burners on and the frig cold. We're encouraging Darth Nacho to look for versions of his field that are relatively recession proof as he starts his adult life after graduation this May. I look around me and realize I'm in a very small island of safety, and if I'm not vigilent about the sand bags, even that little island will be gone.

Don't think of me as the economy worsens, think of those who are worse off than me, who made the same stupid mistakes, but had less cushion, who had worse luck, or who were more impacted by the economy's effect on their employers. Think of those guys. And remember. The same Republicans who will dish up 36 BILLION dollars to bail out Bear Stearns can't be bothered to build a decent safety system for the real live people whose daily lives and contributions make corporations like Bear Stearns possible. You know, the people who aren't asking them to protect their swimming pools and Audis, but merely their ability to earn a living, feed their kids, and get decent medical care. Remember them.