Personal Finance Story: Baby and Job Loss
T was brought into our lives in July, 1999. We were so excited and loved being parents. The idea of me being a stay-at-home mother never entered my mind. I was extremely focused on having a career. As a matter of fact, I was itching to get back to work, and did just that when he was 6 weeks old.
It's a good thing I did too.
That winter, Paul was laid off from his job. That's probably when the debt first hit us. Up until then, we really didn't have debt other than the house and car payment. Sure we had some stupid financial mistakes already but no debt since we both had well paying jobs. When Paul was laid off and it was me being the primarily bread winner for the family, it strapped us. It caused an emotional strain on our relationship too.
During this, we knew we should tighten up and not spend as much, but our spending behaviors never changed, credit became our friend. Paul was getting unemployment and we were still paying our bills (luckily, we have never been late on a bill). But, those luxury items we were used to like eating out and shopping for unnecessary things, were paid for mostly with credit.
As I mentioned before, Paul just had his Associate Degree. It was always in the plans for him to complete his Bachelor's so he took his layoff as a time to do that. He received an extension on unemployment as he focused on school. We did incur student loan debt. We saw that debt as a “gotta spend money to make money” thought.
I still agree with that philosophy since an education is something that you will need and should help you achieve goals and provide a better financial future. I know many may disagree with that thought, and that's fine. I worked in HR for years, and we would rarely hire someone without a college degree. With today's economy and talent surplus, it is even harder to get a foot in the door today.
During this layoff period, I was under an immense amount of pressure as the primary breadwinner for our family. If you have never been in that situation, it is tough. Unfortunately, our marriage suffered..a LOT! We were both going in to separate directions. We weren't communicating at all, let alone about finances! I was resentful to my husband since I had to go to work everyday. I knew what he was doing was going to help us in the long-run, but I didn't see it. A man has so much identity in his work. Obviously he wasn't excited about not working either. I was overall annoyed.
Yes, I was somewhat immature. We are happier now than we have ever been and grateful for that trial. I will elaborate in a future post :)
I guess I wasn't too immature because I decided I wanted to finish my degree too. So, I did just that. As I worked full-time, my husband went to school in the evenings, after all of the mommy stuff was done late at night, I went to school. I found a great school online that offered integrated coursework (Marylhurst University for any OR peeps). It was one of the first colleges to do online courses, now it just seems like the norm! So, I was working towards that degree, luckily my employer offered an extremely generous tuition reimbursement program so we incurred very little student loan debt.
FYI, look at all the benefits your company offers, not just the annual salary. While I was making a fair salary, the tuition reimbursement package was an amazing financial benefit. Think about the entire package of compensation and benefits.
While Paul and I were doing the school thing, he also got a random job at a Credit Union during the day. It allowed him to take classes at night. It was just something to bring in income so things weren't as tight. Eventually he finished school, got a supervisor role at a local manufacturing facility and we moved into a larger house…with a larger mortgage and PMI (YUCK!).
Here's an example of how a bank will lend you whatever they think you can afford.
We were actually considering building a home before we eventually moved into the home I just mentioned. As we finalized the building plans, we had an ending total that was crazy high! Or, at least for these two 20-somethings starting a family. I remember laying in bed one night discussing the thought. It was that night we agreed there was no way we could do that mortgage and didn't build. Luckily, the house we ended up going with was around a quarter of the price cheaper which helped reduce our payment. It was more affordable and within OUR budget, not what the bank thought our budget could be.
This was in early 2001 where EVERYONE, it seems, got approved for credit ;) We sure did too! We got approved for even more than what our home cost. Of course we didn't have 20% to put down, but we did have 10%. So, if you don't have a full 20% down, you would get to pay for PMI. Never pay for PMI! The banks made us think it was “normal.” If we would have had others guiding us, we would have realized that paying insurance on the thought of us not paying the mortgage made no sense.
I so wish Dave had written, Total Money Makeover, before I got married!
Also, as we were selling our current home, we took a loss of around $7,000. Honestly, at that point we were just glad to be done with it! But, given our income at the time, that was a huge loss to us. I'm still amazed we even had the 10% to put down on our new home. Looking back, I have no idea how we had that amount after the layoff just months before – I guess we did save some.
How many financial mistakes is that now? I've lost count!
Personal Finance Story Related Posts
{1} Love and Marriage
{2} Jobs and Education
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We all make mistakes when starting out. In 1991 my [now ex] husband and I bought a house that we could afford, but since it was owner financed had a prepayment clause. I almost didn’t sign the document. If we paid more than $10,000 towards the principal in any year we would incur a 20% prepayment penalty. I immediately thought of the cost to us if we were to sell, but he said that was not what it meant. I wish I would have argued it a bit more as I ended up paying a lot of money when I did finally sell the house years later. But I learned from it and it did afford me the money to put down [20%] on my second home.
If it were not for the mistakes we make then we would never learn. It’s all part of the process and it teaches us coping skills. It’s not all bad. :)
Anne, looking back I definitely see that. But, I sure would have liked to have had a resource to help educate me in my younger years. It is all in the learning and how that shapes our future decisions for sure.
I just wanted to tell you how this post resonated with me. Last week, my husband started back to work for the first time in more than 8 months. Just before his layoff, he paid infrequently, if at all, so he entered his layoff about 2 months behind in his pay. And before THAT, he had his own contracting business that floundered with the housing crisis. See where this is going? Yeah…I carried us financially for well over a year. I know exactly what you were feeling during that period.
When we bought our house in late 2005, I wondered then if we were buying too much house, but we were fine on two salaries, and even after having our son in 2007 — `til hubby’s business crashed. Needless to say, we will be moving into a rental house in a few weeks , and we are in the midst of a financial morass that will take us the rest of this year to sort.
I’m not sure why it’s taken us to our late 30s to learn our lesson financially, but I think it’s safe to say that we finally got the message. It’s really been the hard way to learn, though…
Mindy, I’m so glad your DH is back working again. As you read, I know first hand how challenging it can be, not just financially but emotionally. As I looked back to reflect in writing this, I realize that I am thankful for what we went through with all of this. It made my DH and I come out loving each other more and completely focused on one goal. Unfortunately, until then we were newlyweds sort of living our single lives just living together (in love, but still).
We’re in the process of working Dave’s baby steps and are almost done with paying off our debts. (YAY!!!) We bought a house we could afford, but we keep looking back wondering how much more quickly we could’ve been out of debt had we just rented a bit longer. It’s funny how much a house costs in addition to the actual payments.
I am currently our primary breadwinner, and we’re trying to figure out a way to change roles. It’s just taking longer than I’d like right now! So I totally understand those nagging feeling that you’re talking about! :)
I can relate to the breadwinner part. That’s definitely a tough position (for both sides)! My husband walked away from his job 4 yrs into our marriage after he lost his brother in a car accident. It was so not about the job & everything about grief from his loss, but I was completely walking on eggshells and could not be fully honest with him about my feelings. It was a long 3+ yrs until that role started to change again and of course many bad decisions along the way. Thanks for sharing your heart:)
DH and I got married when we were 20 while we were getting our BA’s and working. We moved so he could get his MA and PhD in another state while I worked full time. All the grad school was 8 yr!!! We still have a lot to pay on his student loans, but I am another Dave Ramesy fan who agrees with you on spending $ for an education. It was long term ticket out of being low income. We have paid a lot of debt off in the last year and 1/2 with Financial Peace University. I really wish we did the program years ago when I first heard of it, but better late than never :) Also his frugality lessons is what led me on a search to find out more about couponing.
Thank you for sharing! My husband and I took out a home equity line on our home a few years back. Major mistake! He lost his job and then was offered a job in a different state. We now live in two different states as I try to sell our home for just enough to break even. With out the Home equity line we would have no problem selling. This has been a huge lesson to us and we are working a lot harder to get our finances in order. I’ve come to learn that mistakes happen. You can’t change the past, but you can learn from it and move forward.