Have an umbrella

Now that we have paid off all of our non-student loan debt, we have decided to prepare an emergency fund.   I have frequently heard Dave Ramsey say “if you know it is going to rain, you better have an umbrella.”   Well, my job is kind of like a large storm on the horizon.  I work for a start-up, albeit a rather nontraditional start-up.  That means there are basically two outcomes for my future with the company.  One outcome is the company is successful and we get acquired by another entity, resulting in a real valuation of my company stock and options.  This would be wonderful and would provide significantly for my family.  The other outcome is that ultimately we run out of steam and we all start looking for new employment.  Then there are the many possibilities that land somewhere between these two extremes.  But for the most part, the venture is Pass/Fail and this is exactly why we are starting to prepare a larger emergency fund.  In absence of all other possible needs for an emergency fund, and with the simplest of probabilities, there is a 50% chance that we are going to need an emergency fund at sometime in the near future due to lack of employment.

To fund this emergency fund, we will be channeling all of our debt snowball funds into savings and stop paying off debt.  This is a bit frustrating, but I feel it is necessary.  That being said, we will not be meeting our year end goal of $15,000 of debt payoff.  But we did make it a significant way there.   We now have only some low maintenance student loans, one of which is still deferred while Lindsey is in school and the other has very low interest.  As a result of our hard work for the last 2 years, we have been able to eliminate credit cards from our lives, we have a paid for vehicle, we have freed up a substantial portion of our monthly cash flow that was previously allocated to debt maintenance, and have an entirely different mindset about how we buy things.  We are permanently changed.