A Little House Cleaning

I have read that the best way to keep from accumulating a lot of junk in your house is to move every 5 to 10 years. A move of the house forces you to evaluate every item in the house and decide whether it is worth the effort to relocate the item or is its best purpose in life is a spot on the pre-move lawn sale. Box after box of items that you have not been opened or looked at since the last move. In my Navy days with a move every couple of years we had boxes that had 3 or 4 stickers on them, each identifying it as a passenger on a different moving van.

What does this have to do with anything? No, I am not planning on moving just to justify getting rid of some of my junk. I'd rather build a garage so I could store even more. Or even better a barn, like my father in law. What got me thinking about this was having gone through several forced job changes in the past decade. Having lost or soon to loose two jobs in the past 7 years through no fault of my own (I hope) has changed the way I handle my personal finances. Having experienced the loss of that paycheck has firmly implanted in my brain the fact that just because you have a pay check this week is no guarantee that it will be there again next payday. It has forced me to clean out my financial closet. Just like cleaning out the basement or the attic this has been a good thing.

The loss of a job changes ones comfort level with debt. It forces you (or at least it should) to better prepare for that day when the money stops flowing. I will be the first to admit that as a young adult I was not very smart with money. I spent most dollars that came my way and quite a few that had not arrived yet. I purchased my first new car when I was only 21 and I could not have told you what I paid for it or what the interest rate was or even the length of the loan. The only thing I could have told you was what the monthly payment was and that it would still allow me enough money to buy gas and beer.

After my first child was born and that shiny sports car was not big enough to fit my expanding family I had to trade it in on something bigger. That was the day I learned about being upside down in a loan. The car was not worth what I still owed on it. So I had to roll that unpaid debt onto my next car loan. It was a debt snowball going in the wrong direction. That is only one example of my bad money sense and there are many more.

I was lucky enough in those early years and subsequent to that to be able to out earn my stupidity. I was able to cover my mistakes by earning a good living. I was never was behind in my bills and had a good credit rating. But I also never got ahead. The savings never seemed to grow and the debt never seem to get less in-fact it usually grew. As I paid off one thing I just transferred the debt to something else, another car, a boat, furniture, always something.

When I lost my job 7 years ago we started making better decisions. We began a slow focus on limiting debt and building our savings. We did not see the light overnight and it was a gradual process but slowly the light bulb came on. Lucky for us we had a pretty good warning this time around and we have known for over a year that my job was in jeopardy. This was a second wake up call and we prepared even better this time to be able to weather the loss of income. That preparation helped me sleep at night knowing that we would survive until another source of income would come along.

Here is the best part of the financial house cleaning. Each time we have been forced to "clean house" it has made us stronger, smarter and more financially resilient. Seven years ago I was fortunate to move directly from one good job to another. I did not have to use my emergency savings. Now if things go as they seem they might, I may be able to move directly to another good job. It is as if the better prepared you are to weather a storm the less likely you are to encounter one. Is this the inverse of "Murphy's Law"?

If I am lucky and the income continues to flow, will I revert back to my old spending ways? No way! Because I know that nothing is forever and you best be prepared for the worst (while hoping for the best). I just feel sorry for those of you who have never been lucky enough to lose your job. But then again you are probebly smarter than me and didn't need to be hit over the head by life to learn.