There was an article on the front page of my local paper yesterday about a local middle class family that had gotten into such financial difficulty they were a step away from homelessness. I found this article very interesting for many reasons, the least of which being, that could be any one of us. If you do not have an emergency fund, you are 1 paycheck away from being homeless.
The Father had a good job making $17 an hour as a mechanic, which more than covered their expenses. They have 2 kids, the Mom was a CNA, and starting a small business (consigment shop) - with the hopes of bringing in $200 a day in sales…..but, a few years back during the housing boom, they decided they wanted a bigger house. So, they sold their 900 SF house for $205K , and took out another loan for a 3 bedroom 1400 SF ranch with a pool for $249K.
Problem #1 - They took the proceeds from the sale of house 1 and paid off a bankruptcy debt, bought new bedroom furniture, and inventory for Mom’s new store. The article also states that “Christmas was the best ever that 1st year in the house” - you can read into that any way you wish - my translation was they pissed away a LOT of money on gifts!
THEY SAVED NOTHING.
Problem #2 - Dad lost his mechanic job when business slowed, and took a $1400 a month job - not even enough to cover the mortgage - which they have not paid since April. They are $11,000 behind on thier mortgage.
HAD THEY AN EMERGENCY FUND, THIS WOULD NOT HAVE BEEN SUCH A HUGE ISSUE.
Problem #3 - The consignment store floundered, and they are barely covering utilities.
Problem #4 - Dad was injured in a car accident at job 2 (truck driver) , and was reduced to “light duty” - the employer has no “light duty” positions , so Dad is out on Workers Comp, but has yet to receive a check.
They are so behind on everything, they are not even concerned about bad credit, only covering basic needs. They have applied for public assistance for food, had their water turned off, electric was turned off due to being $800 behind, but it is back on now thanks to local aid and a few generous souls. They are using pool water to flush the toilet, and showering at friends & family.
They are afraid to leave the house, that it may be locked up in foreclosure when they return.
They owe a family member for the down payment of the new home?! Huh?
I have so many problems with this, I can’t even list them! You SOLD a house for PROFIT and used NONE of it towards the new house?
They had a yard sale to try and raise money to cover basic bills, and she listed the fancy $4500K furniture they bought with proceeds from home #1 on Craigslist…..and the house is up for sale - for $200K, even at that price, in todays market - we all know what that means.
The article makes a tiny mention in the description of Mom, that she is holding a COACH bag….if it is a real Coach, selling that bag would have taken care of their water bill arrears…..why is she holding it and not SELLING it??
SELL EVERYTHING BUT THE KIDS!
Coach Bag - gone.
2001 Toyota Sienna - gone, and buy an older paid for car.
If anyone read this article in yesterday’s paper, and did not feel an immediate need to start living within their means and put emergency money in the bank - they are fooling themselves. Learn from another’s mistake, and start an emergency fund NOW. It matters not how large it is, as long as you have something to fall back on.
