By Andrea Whitmer of So Over Debt
When I entered the workforce after college, I was full of enthusiasm and a desire to change the world. I had a salary and benefits! An office with my name on the door! LIFE WAS AWESOME! Dealing with potential financial emergencies was at the bottom of my priority list. Why would I worry about anything except spending my new paychecks?
I coasted along for six years, depending on my paychecks (and credit cards at times) to meet my needs. Last year, however, I learned that I did myself a huge disservice by ignoring the need for a backup plan. If not for a complete coincidence, I could have lost everything I owned.
The Problem
Last August, I transferred from a salaried position to a billable hour job within my company. Before making the decision, I spent a lot of time getting the facts - I talked to my future coworkers, future supervisor, and the HR department to make sure I understood the way the pay was structured.
When I started the job, I became aware of several caveats that no one had told me about, most of which were outside my control. My paychecks were low at first, as expected, but when my billed hours increased and my income stayed the same, I (naturally) wondered why. None of my coworkers could figure it out, so I went to my supervisor. Then HR. Then the company’s VP of Finance.
Long story short, there were several errors, none of which were mine. The first, a payroll issue, was easily fixed and I was compensated for the missing money. The other problems, though, weren’t so easily solved. The offer letter I received differed from the policy manual, which didn’t match the payroll system, which was completely different from the explanation I got from the VP of Finance. Basically no one in the company understood how I was supposed to be paid!
Unfortunately, the company opted to shrug their shoulders instead of making an effort to fix the errors. I was told, “You’ll have to spend your own (unpaid!) time figuring all this out if you want to be reimbursed because no one else has time.” My paychecks kept coming in, barely equal to minimum wage. Eventually I’d had enough, and I resigned.
The Solution
How did I pay my bills during those months of very little pay? After all, I was completely unprepared to lose most of my income - my emergency fund was tiny.
Earlier last year, I started a blog. Nothing big, just a hobby. After a few months, though, I was approached about doing some freelance writing on the side. By the time I changed jobs, I was earning quite a bit of extra income. That money paid my bills when my paychecks weren’t enough. In fact, when I got fed up with my job, I left to pursue full-time blogging and freelancing. Definitely not something I ever thought would happen to me!
If I hadn’t been writing and earning extra money, I’m not sure how I would have survived without turning to credit cards, payday loans, or my parents. After years of making an adequate income, it truly never occurred to me that I could lose it in an instant. Yet that’s exactly what happened.
What I Took Away (And You Can, Too!)
This experience has been very humbling for me. I learned the hard way that nothing is guaranteed, not even a paycheck from the company where you’ve worked for years.
As I enter the world of self-employment, I am working hard to cushion myself from possible emergencies. That involves developing multiple sources of income, so I can make money even if an assignment or professional relationship doesn’t work out. It involves saving every dime I make that doesn’t go toward taxes or expenses. And, most of all, it involves the constant awareness that what I have today may not be here tomorrow.
No matter how secure you feel in your employment, take the time to plan for disaster. If you never need to put the plan in action, that’s wonderful! But if you do, you won’t be blindsided by a situation with no easy answers.
