- Date : 12/12/2019
- Read: 5 mins
A financial hardship can strike anyone, anytime. How do you cope with it? Here’s my story of how I managed to survive an entire year only on my savings.
Sudden unemployment can strike anyone, anytime. How you handle it depends on a host of factors, but primarily it is a question of being prepared for it. Here’s my story of when I was faced with unemployment, and what I learned.
Until I lost my job, I would scoff at people who were not financially savvy. Anyone who didn’t have decent savings or hadn’t managed to clear off a debt was, in my books, to be silently ridiculed.
That is, until I lost my job.
All of last year has been a series of crazy events that I never believed would ever happen to me. What did it teach me? That, no one, including savvy me, is immune to tough times. We live under the false belief that things are under our control, but the truth is that they aren’t, and anything can happen unexpectedly.
What you can control, however, is your response to it and to a large extent how well-prepared you are before anything untoward happens.
How my misfortunes unfolded
I was caught on the back foot when I was laid off from my job last year. I had not been scouting for a new job, and the firing came as a complete shock to me. I had no plans and zero jobs lined up. I had to start tapping into my savings safety net. I had savings that could cover three months of living expenses.
Nothing could go wrong, right? I mean, I would land a job soon enough.
Three months go by pretty quickly, come to think of it. Before I knew it, I was running low on my savings. This was despite living with my parents, so at least some of my daily expenses were taken care of. I needed a little more time and a little more money. I got in touch with my financial planner and prematurely closed a fund that I had invested in for short-term saving instruments. Believe me, that hurt.
I got myself a part-time job but that couldn’t be a long-term plan. A few months later, I quit the part-time job so that I could actively hunt for a job again and get my career back on track. But the market was not receptive, and I was unable to land a job by the deadline I had given myself.
I saw another short-term savings fund dissolve – the money I had been putting aside for my Ladakh trip next year went towards taking care of my daily living expenses.
This is how things are today
It still hurts that last week I had to break one of my fixed deposits and use the money to sustain myself. Imagine the irony: all my working life I followed every blessed rule in finance, and in the last 12 months I’ve broken every one of them.
Before I got into this predicament, I couldn’t understand why people wouldn’t save or even pay off their debt. But I do now. I am willing to give the benefit of doubt to people who suddenly find themselves in a tough spot.
I also understood very clearly why it is so important to live debt-free and to get into the habit of saving regularly. Even financially prepared individuals can suddenly find themselves at the mercy of their circumstances. At such times, when survival is most crucial, every financial rule goes out the window.
I shudder to imagine my situation had I not had my savings and investments to rely upon. And luckily I was debt-free. I’m immensely proud that I managed to survive an entire year on my savings alone. It’s not that I gave up on fun either. I spent time with my family and friends; I travelled a modest amount; I continued to live my life. I just didn’t eat out much and quit shopping completely.
Not everyone is as lucky. I look back to the year and want to look at the positives that I learned. And I wish to share them with others who might face hard days ahead. If I can help convince even one person to start taking debt and saving seriously, I’ll believe it was all worth it.
Here’s what you can do
If you were moved by my story, here are a few action steps you can take to stay away from financial predicaments like mine:
- Clear off debts regularly and close any loans that you might have. Trust me, the fewer financial obligations you have, the better it will be.
- Put aside money every month, irrespective of how much you get paid. You’ll be amazed to see it add up if and when you need to dip into it.
- Always make sure you have 3-6 months of essential living expenses put aside. Do not touch it or spend it on anything.
- Contribute to your PPF account regularly. The first five years are a lock-in period, but after that you can withdraw money without paying any penalty charges.
The idea behind sharing my story was to motivate you to be prepared for a similar scenario, and to encourage you if you are already facing something similar to what I have gone through. Remember, whatever happens, keep your chin up and you will get through it. Tell us how you manage your money. Share your story here.