Not too long ago I was a market research consultant in Baltimore City, Md., living the good life.
As a 26-year-old with a $70,000 salary and no debt to speak of, I had enough money in my budget to cover the essentials, splurge on a few "wants" — and divert several hundred dollars each month into an emergency fund.
Saving had always been important to me. Growing up, my parents had emphasized the value of having a safety net, and I'd read how crucial it was to fund an account especially for emergencies.
But while I knew I was doing the responsible thing by saving — at least in theory — I never imagined I'd actually need my emergency fund to pull me through a bona fide crisis … like the unexpected layoff that caused my cushy paychecks to come to a grinding halt.
I began working for this employer, an emerging health care market research firm, three years earlier. With a starting salary of $60,000, co-workers I got along well with, and a schedule that let me work predominantly from home, I was more than happy with the gig.
Buoyed by the fact that I got promoted every year, and garnered an extra $10,000 in raises, I felt like a secure and valued member of the team — a confidence that spilled over into my personal life too.
I never had trouble covering the $1,350 rent for my two-bedroom apartment, I had money to go out with my friends, and I could swing little vacations — like a trip to Mardi Gras — without breaking the bank.
But I tried to be careful with my money, too, monitoring my spending and stashing 7 percent in my 401(k) — habits I attributed to being raised by good financial role models. My parents prodded me to pick up an after-school job as soon as I turned 15, and always encouraged me to contribute to a rainy day fund — a lesson that really hit home when my cat got sick, blindsiding me with a $600 vet bill.
At the time I had about $2,000 in savings, which I used to cover the cost. After that episode I remained diligent about regularly contributing to my savings, and it wasn't uncommon for me to kick in $500 on some months.
The only time I ever veered off my strict savings plan was when I was anticipating a vacation. Since I worked hard and was responsible, I didn't feel guilty about diverting some cash into a travel fund. In June 2014 I decided to finally dip into that fund and visit my best friend in England — a getaway I'd been considering for close to a year.
So I started working out the logistics, and e-mailed my boss about taking some time off around Labor Day. Little did I know that just two days after I put in my request, I'd have the rug pulled out from under me.
My financial life jacket helps keep me afloat
The day that I lost my job, I was in the office for a team meeting. Afterward, my bosses pulled me aside — presumably to tell me I'd been granted my requested vacation time.
Boy, was I wrong. They informed me the company was downsizing, and my position had been eliminated. I got a 12-day severance and was sent home.
I was in complete shock. I hadn't heard any gossip of impending layoffs, but either way I wouldn't have guessed my own job would have been in jeopardy.
I spent the next few days alternating between tears and disbelief, although I did manage to pull it together enough to apply for unemployment and review all my financial obligations — between rent, utilities, my phone, and other assorted necessities, I was on the hook for about $2,000 a month.
At first the number scared me. How would I come up with that money? But when I added in my $400-a-week unemployment check, and the fact that my severance upped my cash funds to $12,000, things didn't feel quite so dire.
Still, I devised some additional lifestyle changes that would help stretch my cash while I scoured the internet and tapped contacts for job leads. I canceled a $50 membership to a clothing rental service, and stocked up on frozen meals, which lowered my grocery bill. All in all, these types of changes saved me about $200.
A few weeks into unemployment, I started to feel a bit better about my situation — especially since my emergency fund balance was still high. I didn't have any solid job prospects, yet I began to wonder: Is going to Europe totally out of the question?
I knew most people would caution me against giving in to the travel bug in the wake of financial uncertainty, but I really felt like a getaway would give me the energy I needed to forge ahead with the job hunt.
After factoring in my flight and European train fare — and cutting some of the trip's costs, like staying with friends instead of hotels — I'd still have $8,000 left in my savings, plus $1,600 in monthly unemployment checks. I'd also calculated that I probably wouldn't start to feel the pinch of unemployment until October … and surely I'd have a job by then.
With that assurance I packed my bags and set off. Emotionally, getting away was just what I needed to clear my head — and, to this day, I don't regret going. Once back home I resumed my job search and was thrilled to land some freelance work.
There was just one catch: Since it paid $300 a month, it would disqualify me from receiving unemployment — and put a $1,300 dent in my monthly income, forcing me to plunder about $1,600 from savings each month to make up for the lost cash.
I weighed my options, ultimately deciding that I'd rather be working hard on a part-time gig that could potentially lead to a full-time position than collect unemployment.
And I'm glad I took that leap of faith. It's been incredibly motivating to get back to work and finally make my own money again — plus, it gives me hope that a full-time offer is right around the corner.
New job, new rainy day fund, new money outlook
Right now I'm feeling really hopeful about a particularly promising job prospect on the table — but I'm starting to feel the unemployment pinch too.
In the four months since my layoff, I've dwindled down my emergency fund to under $1,000, which scares me a bit. But I'm still freelancing, and I've just picked up another project that'll pad my monthly income with an extra $150. Although it's certainly not ideal, I'm comforted by the fact that I could lean on my parents for a short-term loan if necessary.
The truth is that unemployment does a number on your self-esteem. Spending your days at home looking for work — especially while your peers are out there thriving — can be humbling, to say the least, and it's hard not to feel like a failure sometimes.
So it helps that I have something to feel really proud of at the same time — which is the wherewithal to build up my emergency fund the way I did. I've had friends tell me they never would have been able to survive financially if they were in my position — especially not as many months as I have.
Sometimes I think about how this time would have been different if I'd failed to prioritize savings, like many of my peers. For starters I'm sure I would have had to give up my apartment — and either moved in with roommates or back home with my parents. Losing my home was the one thing I was most concerned about after being laid off, and I'm grateful it didn't come to that.
That's why you can bet my first order of business after landing a new job will be to build up my emergency savings once again, so I'll be equipped to handle any curveballs life wants to throw my way.
I'm also committed to making new money-saving lifestyle tweaks in order to save more — faster. For example, I'm planning to call my cable company to renegotiate my bill for additional savings. In the end, I've realized cutting back isn't so painful when you're tuned in to the big picture.
At a minimum, I'd like to get back to kicking between $500 and $700 to savings each month. But if my future paycheck allows it, it'd be nice to save even more aggressively toward my new goal of getting back up to $12,000. Since it's an amount that's served me well over the last several months, I figure once I see that number in my bank account, I'll finally feel comfortable again.
In the meantime, I'm just taking it day by day — working hard on my freelance projects, pursing every job opportunity that presents itself, and thanking those lucky stars that my emergency savings saved me.
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