Emergency Mode – Stop the Debt Snowball and Pile Up Cash

“By focusing on our finances regularly we were able to see an on-coming train and prepare for the safety and security of our family…”

My cheese has been moved.

Last week things at work took a huge shift; a majority of my colleagues signed union cards and filed their intent to vote on organized representation with the National Labor Board.

I’m not going to debate the idea of union vs. non-union work here, but as a jack-of-all-trades whose position is impossible to classify, organizing is not in my favor at all. The two most likely outcomes I see are either a strict narrowing of my duties and a pay decrease of about 50% or an elimination of my position.

The entire union process, as I understand it, can take 6 weeks to several months or even years to complete should it be voted in. This means for us an undefined period of uncertainty followed by a potential large cut in pay.

The Wife and I sat and talked several times since the announcement and have decided to shift into emergency mode. Our current, and final, debt stands at $13,000 and we were on-track to pay it off by the end of the year. Instead, this month I sent in the minimum payment and put the rest (what would have been our “snowball” payment) into our savings or emergency fund.

Readers know we have a small, $1,000, emergency fund that has saved us and kept us going for nearly 18 months of this journey to become debt free. With the potential elimination of my position or reduction in pay we are going to boost that emergency fund up as high as we can until my employment is stable again.

But what is stable? And how high is high?

If the vote fails and things settle back to “normal” at work we will immediately pull everything but $1,000 out of savings again and throw it at the debt. We will have lost barely any time and will pay just a couple hundred more dollars in interest.

If, on the other hand, my career ends up changing either by taking on a new role, changing companies or starting up an entirely new venture, then “stable” may be defined as simply regular and reliable paychecks we can count on again.

The Wife is willing to take less risk than I am so she leans toward 6 months of living expenses while I am okay with 3 months. So, of course, we will compromise and do 6 months [sic]. We are in complete agreement on what to do if we hit that number and we still find ourselves in job-limbo: we will start throwing extra money at the debt again until either the debt is gone or work is stable.

I am amazed how clear it becomes when working together with your spouse with both of your priorities in-sync. It does not remove all fear from an uncertain situation, but it gives you control over the part of your world directly in front of you. “The power to change the things I can.” That alone puts the fear of change into perspective and puts logic and reason in charge instead of emotion.

What this financial plan has really created for us is a fantastic set of tools for communicating with each other and understanding each other’s needs. By focusing on our finances regularly we were able to see an on-coming train and prepare for the safety and security of our family with enough time to get through just fine.

Plus I have tremendous faith in The Wife as a woman, wife and mother, and she reciprocates that faith in me. There is no doubt at our house that something will be killed and dragged home every day.

Time to go find my cheese.

the Dad

9 Responses to this post.

  1. jpkittie's Gravatar

    Posted by jpkittie on 08/27/10 at 7:46 am

    I hope that nothing changes that effects you…. I am very happy for you that you and the wife are working together – it makes everything so much better in life…

  2. Kathryn's Gravatar

    Posted by Kathryn on 08/27/10 at 8:14 am

    My husband and I are on a similar journey and, like you, are down towards “the light at the end of the debt tunnel”. I have also learned the amazing power of you and your spouse being on the same page, in sync as you put it. It’s amazing and powerful. I am reading a book written by Greg Boyle, a Jesuit priest, who started a mission in LA that rehabilitates gang members. He wrote of the day to day struggles when working towards the common good. And he refers to the “magic” of provision when you’re focused and it’s (paraphrased) that “today we have nothing in the bank but tomorrow we will be able to pay everyone”. Point being you know best how to make sure your tomorrow is taken care of and I think Dave Ramsey would approve your change in plans since, at the core, it’s focused on being a responsible adult who is planning to take care of your moral obligations. Remember, everything happens for a reason.

  3. Stacie's Gravatar

    Posted by Stacie on 08/27/10 at 10:09 am

    I think it’s wonderful you have a plan while you work through these storm clouds. We also had to stop our snowball with $13,000 of debt left because my husband lost his job. He is now employed again so the snowball is rolling again!

    Everything will work out!

  4. Jeffrey Johnson's Gravatar

    Posted by Jeffrey Johnson on 08/27/10 at 2:57 pm

    Unions no longer needed. They were good in past. Thank God Southerners hate them. Only a fool want a union now. Unions tool of devil.

  5. laura @ no more spending's Gravatar

    Posted by laura @ no more spending on 08/29/10 at 11:25 pm

    It makes perfect sense to increase your ef at this time; I hope that a) you don’t need it and b) things don’t change at work for you.

  6. Li’l Shelley's Gravatar

    Posted by Li'l Shelley on 08/30/10 at 5:40 am

    Hey! We’re taking a trip together – The emergency train has also picked us up for a vacation in who knows where. T’s employee quit w no notice and we found out he made a few serious mistakes that might get the agency closed down. I was so relieved to see Dave Ramsey has an Irregular Income sheet (which is kind of a joke because all it is, is a piece of lined paper. You prioritize you expenses and when the income’s gone you’re done paying bills!) BUT we will see you on the other side cuz!!!

  7. Sharon's Gravatar

    Posted by Sharon on 08/30/10 at 7:44 am

    It’s a blessing that you had a head’s up on this one, however, I’m sorry you have to go through it. Piling up money for an emergency fund is a smart idea. Your debt can come second, and aren’t you glad it’s as low as it is now?

  8. Jeff Kosola's Gravatar

    Posted by Jeff Kosola on 09/04/10 at 5:21 am

    Hey theDad,

    beefing up the EF is a great plan. You never know what’s going to happen with a union. I can say that because I work with a union everyday, all day. It’s good and bad at the same time, but protecting yourself this way is great.

  9. Jeff's Gravatar

    Posted by Jeff on 03/06/12 at 7:04 pm

    Sorry this has happened to you. I work for a unionized employer and I will only say that I hate being a member of a union. Vote no keep your independence. Keep in mind that if the organization effort is successful, you will be pay dues to the union to have you pay go down.

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