If You Knew For Certain That Your Life Was About To Change
And not in a good way, what would you do to get ready?
I admit that I didn’t know for sure that the business my husband and I own and operate would eventually be hit hard by the downturn in the economy, but of course, I suspected as much.
It just makes sense, doesn’t it, that some clients are going to have to cut back on the goods and services they formerly purchased from us, until their own businesses are back on a better footing? Still, until last Friday, our corporation continued to earn as much money—-or more—-than before things started going south.
But all that’s changed now, if this past week’s news is any indication. In fact, after hearing from three separate long-term clients, we’re estimating that upwards of 40% of our income will be disappearing within the next month.
We’ll be scrambling to find new clients to replace this loss, but in the meantime, I’m happy that I’ve made some significant changes to our personal balance sheet that will serve us well going forward.
It’s useful to imagine bad scenarios in life, if only so that we can prepare ourselves to withstand hardship if and when it arrives. And honestly, is there ever a circumstance in life that can’t be mitigated more easily from a debt-free position?
Getting completely out of debt (except for a smallish mortgage) has given us a far better return-on-effort than any investment in the stock market has ever returned. Toward the end of working our Dave Ramsey-style debt snowball, I think I was sending two-thirds of our monthly income to finish off that final bill.
And guess what? No sooner did we make the last payment than the stock market crashed. We lost plenty of money, but the impact on our net worth would have been truly terrible if we’d had a pile of debt on the other side of the equation.
As it was, our net worth took a dip but not for long. Because the very next project I undertook after satisfying the debt was to start accumulating a much more generous emergency fund than we’d ever had before. Plus a car replacement fund, a home repairs fund, a Christmas fund, and well…you get the idea.
I didn’t know our car was going to start behaving really badly, causing us to realize that we needed to update with a late model used car sooner than we’d planned. But when the time came, we actually had the cash saved up in advance—-something of a miracle for us!
Last week, right after the exterior of our house got wrecked by hail and before we found out about our business problems, we closed on a refinance. We lowered our rate, shortened the remaining term to ten years, and will be saving $400 per month.
So, yeah. Our lives are changing, and our successful business is facing difficulties we couldn’t exactly predict. And yet, in a way, we could. I don’t imagine we’re going to have the easiest time getting through this period, but I do know this: If we hadn’t buckled down and prepared for an uncertain future, we’d be in much worse shape going into this than we are.
Any steps you could take now that would soften a blow, should it come? Why not get started, while the stress isn’t as great as it would be during a full-blown disaster?
Who knows? It could even turn out that your pre-emptive efforts will keep disaster from striking at all. Or, if it does, its effects won’t take as desperate a toll.
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