May 2022. This is a post from the beginning of the pandemic. It’s been sitting in my draft folder for more than two years now. I am publishing it without revising, so please excuse its first-draft form.
Back in 2018, I thought I was going to start a personal finance blog. You know, with all my free time. It turned out that 3SMReviews.com and starting up Keen Eye took up all of my extra time and I gave up that dream. And it was a dream. I really love writing about money.
And even with my solid job, frugal living, and good savings habits, finances always seemed precarious to me. What if I got cancer? How would that affect my savings rate? Would the astronomical yearly increases for health coverage keep me from meeting my financial goals? All of this went unexamined.
But look! Unemployment! A chance to discuss my finances regularly on this blog!
For the foreseeable future, I’ll be doing a monthly check in about what unemployment is doing to the state of my finances.
One of the first things I did was revamp my budget. I use YNAB for budgeting, and I love it. There’s a bit of a learning curve, but it’s the best way I’ve found that lets me save for long term things and adapt to changing financial circumstances. (#nowmorethanever)
If you want to try YNAB, use this link and both of us get a free month. I’m happy to talk you through the YNAB process, though they have free classes.
My budget got revised into three categories: Fixed Expenses, Cut Back When Cushion is Exhausted, and Full Time Work.
I then pulled every extraneous dollar into my Tax Return category, which I renamed Tax Return/Cushion. This turned out to be a good amount, as I had been saving up for some things that either can’t happen right now or aren’t a thing anymore.
Flying to Arizona twice per year to visit my dad? The April trip is cancelled, and I will apply that to the October trip. I will hopefully use miles for the April 2021 trip. The Reverse Loft Bed I was going to build on my five-year sabbatical? I was let go at four years and two months, so there will be no five-year sabbatical.
My plan is this:
- All incoming money will go to the Cushion account, which I will use to budget my monthly expenses.
- When the Cushion account has been depleted, I will draw down my Emergency Fund.
- If I get to the dire state of my Emergency Fund being depleted, I will cut all expenses to the bone and use my credit cards.
- If things are incredibly terrible, I will tap my retirement accounts.
I was about six months away from meeting my Emergency Fund goal of having six months worth of basic expenses. It’s disappointing that I won’t be contributing for the foreseeable future. But at least I have an emergency fund. Many Americans do not.
I really don’t want to have to tap into my retirement accounts, because I feel like I’m behind, but if it means the difference between being homeless and working more years until I retire, I will tap them. And thank goodness that there is money available.
So let’s look at my monthly financials:
Income this month: $4602.72
This includes:
- DHM pay + two weeks of severance: $4524.22
- Keen Eye Pay: $28.50
- Cash back rewards from my credit card: $50.00
- Not included in income because it messes up my averages (and isn’t income anyway) is my tax return for 2019: $1181.00
Expenses this month: $2683.61
This includes:
- An example of why cats, though I love them, are expensive: $1,721.28 for a surgery, blood work for two cats, and a prescription
- Me paying more than half of the Joint Account expenses while Matt gets things up and running with the counseling business and the new job at the jail.
Amount of Cushion: $6527.85
Amount of Emergency Fund: $9353.08
So you can see I’m in pretty good shape for this unemployment thing, at least for the first bit of time.
I pulled my expenses for the last 15 months and found the average was $2029.68 with a low of $1214.46 and a high of $3166.38. I will endeavor to keep those expenses closer to the $1200 amount and further from the $3100 amount.
I’ll have a better idea next month what unemployment will bring. And hopefully I will have some increased income from Keen Eye.