how unemployment got me out of debt

When I was laid off earlier this year, we didn’t panic.  Scuba Man made enough money to cover the basics, except for the beach house mortgage, as long as we didn’t spend unnecessarily.

We spent a lot of time talking about finances and how we were going to manage. We cancelled pay channels on FIOS, Scuba Man stopped his game subscriptions, and we cut back on anything we could.

We also paid off three loan balances, two were balances around $1,000 and one was the car note. Although it saved us money in interest and would lower the amount of monthly bills, it would also lower our savings.

Since the interest we paid on the loans was higher than the interest we received from our savings account, it made sense to us.  When we sent those payoffs, we felt such a great sense of relief.

We were debt free except for mortgages, for the very first time in our married lives!

We had enough of an emergency fund to get us through 6 months, should my unemployment last that long.  After that, we would have to start skipping beach house payments and do a short sale.

I would be devastated if it came to that.  Not because of losing the beach house, but because I couldn’t pay back money I had promised to.  That went against my core beliefs.

Luckily, I found a job within 2 months, just about the time my severance pay ran out.  We are in great financial shape from the decisions we made when I became unemployed.  We are saving more per month than ever before.

We have the money now to fix up our Richmond house to put on the market.  We have money to work on the beach house.  I now think hard about any non-necessary purchases.  This not only results in fewer purchases, but also in having less material items.

Although I don’t want to go through it again, getting laid off taught me a good lesson!

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10 Responses to how unemployment got me out of debt

  1. ihavetriedit says:

    It’s always good to know that OTHER people are going through similar circumstances. My husband and I recently moved for his job. I’ve had a more difficult time finding employment! It’s frustrating to say the least! Great job paying off those loans! I found your blog via ‘tag-surfer’

    • Seashell says:

      Best of luck in your job search. I know just how frustrating it can be. Especially when you spend so many hours a day working on it. With the economy as it is, there are so many people in the same boat. The job I found isn’t the best financially with lower pay and no benefits at all. I am grateful to have found it.

      I checked out your blog and I really like it. Thanks for stopping by mine!

  2. LeRoy Dean says:

    Encouraging post, Seashell.

  3. barb19 says:

    I was wondering how you were coping since the last time you wrote about your finances Shell, so it’s good to hear that what you put into action(cutting back on non-essentials etc.,) is working and now you are reaping the rewards. I feel relieved and happy for you. And you did it together!
    Sometimes we have to hit rock bottom before we see the light, so a valuable lesson was learned when you became unemployed.

    • Seashell says:

      That is so true Barb. We save more than we ever have before, so if something like this happens again, we’ll be prepared. Although it feels like we still struggle sometimes when unexpected expenses crop up, it’s because we pay ourselves first now, instead of last. And using savings is our last resort to solve the problem!

  4. Hi Shell,
    I really felt for you when you were laid off. It’s amazing when we have plenty of money how much we waste on trivia. Its only when we look back as you are doing now you appreciate things more.

    We retired very early due to hubbys health and we live very frugally. It’s almost an artform.
    Learn by the frugal lesson as you are doing…save while you can. I wish I could turn back the clock and our finances would def have beneen in a different shape!

    🙂

    • Seashell says:

      It feels a bit scary in today’s economy for us to even think about retirement, but it’s the big drive behind our financial goals. We know that it will be quite a long time before we can totally retire, but we would like to semi-retire, with much lower stress jobs, sometime in the next 5 -7 years. Lower stress = lower pay, but I think it will be so worth it. I think if we could turn back the clock, we’d already be retired! Hindsight’s 20/20.

  5. Isnt it amazing that we find that “needs” are all that we ever need to be happy than “wants”.
    I am glad you guys are in good financial shape 🙂

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