Do Not Be This Couple!

unmade bed

You made it. You sleep in it.

“I don’t want to be the person digging my own grave.”
–Katherine Heigl

There are times when you hear stories about the troubles of people in financial straits and you feel genuinely sorry for them. Empathy bubbles over and you are silently grateful to yourself that such an outcome did not happen to you.

Then, there are people who dig their own holes. Once they’ve dug their own holes, they refuse to stop digging. Furthermore, they refuse to try to get out. This story is about a couple that kept digging, refused to acknowledge that there was more dirt falling in on the hole than they were digging out, and then refused to climb. Click here to read the story and then come back.

Yes, it’s a shame that the husband lost his job. However, he has shown no hustle and appears to show no initiative to get something, anything to bring money into the household and to bring food to the table. As a trained insurance adjuster, could he have worked as a contractor? Could he have worked with body shops? With auto dealers? Sold insurance? Instead, he decided to plunk down more money to retrain as a medical coder. He could have trained as a medical coder in 3 months if he really put his time and effort in. Instead, he let two years go by before getting involved and claims that it will take another 10 months. What then? Does he have a job lined up? He’s chasing one fantasy with another fantasy.


Continues Below


Subscribe to Receive My 52 Week Financial Game Plan and Get a Free E-Book!


Furthermore, once he lost his job, the family should have battened down the hatches. They should have cut spending to the bone. Instead, they went out to eat and continued to buy organic food. Organic food and restaurants are a luxury you can afford when you’ve adequately funded everything else to ensure that if the bottom falls out, you don’t fall through it.

Instead, they got on the hedonic treadmill and were living the life of Riley (ironically, close to the name of the daughter) while they had jobs. I imagine that they thought that the jobs would be there forever, and, at worst, they’d have the jobs until they retired and took Social Security. They made the mistake of taking out another loan to remodel the house based on this belief. They’re now depending on their kids to pay them rent for the basement to make the mortgage payment.

Prior planning could have saved this family from the debilitating and embarrassing situation that they now find themselves in. Here are some things that they should have been practicing.

  • Save up a 6-12 month emergency fund in liquid assets. This would have at least prevented them from hitting the precipice as quickly as they did and given them some cushion. Of course, given the husband’s dithering and dalliances, they’d have probably burned through that in a heartbeat as well.
  • Pay off debt. Nothing says panic when you lose a job like having to continue to pay the bill collectors. I used to work at Capital One, and one of the things I’d do on the drive home is listen to collections calls. They aren’t pretty. Kill your debt.
  • Invest for the future. At this point, they’ve saved 1.6 times their annual income. They should be closer to 8 times their annual income, and probably higher.
  • Live off of 70% or less of their income. I’m not a huge fan of rules of thumb, but they needed some metric to keep their crazy lives in check. Living on less than you earn is a good start, and it would allow them to catch up on their savings and investing for retirement.
  • Work part-time after the husband lost his job while continuing to work. Remember, unemployment is a full-time job – your job if you find yourself unintentionally unemployed is to find another job.
  • Hustle. Start a side gig. Figure out what people will pay you do to, even if it’s small. Plant the seed and grow it.

These people are in their mid-50s and are sleeping in the bed they made. It’s not a pretty picture. Don’t be this couple. I can assure you that their bed is very uncomfortable, and it’s one of their own making.

Subscribe to Receive My 52 Week Financial Game Plan and Get a Free E-Book!

About Jason Hull

Jason Hull is a Fort Worth financial advisor. Before becoming a Fort Worth financial planner, Jason co-founded, built, and sold a software development company. He is a CFP candidate, has a MBA from the University of Virginia, and a BS from the United States Military Academy at West Point. He is the owner of Fort Worth financial advisor Hull Financial Planning.

Comments

  1. While everyone has bad times fall upon them I am absolutely convinced that individual’s financial situations are products of their own creation. As you illustrated in this case they continued to spend when they should have been cutting every single cost that they could.

  2. Tough love! They sound like people who are waiting for things to happen to them, rather than making things happen.
    I love the organic food bit. Check out the last 10 seconds of this video:

Close