Money Obedience

My wife does not like it when I talk about the worst case scenario. Especially in the case of our finances. It makes me say things like, “Honey, we might have to consider selling our house.” That would not make me happy at all, but I can’t help think about it now and then especially in the face of worsening economic news .

You should know that we both love our house. It’s had additions since then, but part of the house was built in the 1850s. We were told that it was once a mill, and it was powered by a brook that runs along the back of the house. (I’m sure the brook was more powerful than it is now, and I was told by a neighbor that it used to have fish!) It is really nice to sleep with the window open and to hear the water bubbling down. In a later life, the original mill was expanded and became a chair factory, before it was adapted and expanded yet again to turn it into a suburban residence.

When we moved in we had to do some major renovations. Even though the house was in a live-in condition, the kitchen and the master bathroom must have been neglected for 40, maybe 50 years. I suppose the reason for this neglect was that renovating a kitchen and a bathroom are not only messy affairs but are also very expensive. Well, we decided to spend the time and money. I am glad we did. We are now happier than ever in this house.

The downside of this renovation is that we still have a mortgage on our house that we pay off monthly – just as any other family in our situation would. And we financed some of the renovation with a home equity line of credit which we also pay off now.

Well, back to the worst-case scenario. Needless to say, we need regular injections of cash to make our household stay afloat. Since I am out of work now, I will have to find another source of income like another job or a business that generates a profit. We are not in a situation that allows me to retire, nor am I ready for such a step. So, I will have to start making money again at some point. We’re just not in a situation where we can comfortably live on my wife’s salary alone.

The good news is that my wife makes enough money on her own to feed a large family, even if it can’t cover all of our current expenses. Also, her job is pretty secure. So, we would probably be able to survive well enough – at least for a while. And yes, maybe we do have to think about selling. If we have to, we might not live in a house as great as ours is now, but we will probably always have a roof over our heads and food on our table. So many people don’t have that, so I don’t take it for granted at all. Having food and shelter would be ok by me and I am sure my wife agrees.

Thinking about the worst case scenario stresses my wife out, but it comes naturally to me. I always think about the downside when I make a decision – it’s as if I’m constantly asking myself to consider “what’s the absolute worst that can happen?” If I am okay with the downside, then I know that I will be okay under any circumstances. If you ask me, the upside always takes care of itself. Nobody has a problem with his or her plans working out smoothly. It’s when things don’t work out that it’s all a problem – and that’s what I want to be prepared for.

Second, the economic scenario here in the U.S. really has me worried! The financial system is so frozen that it is sucking the lifeblood out of economic activities. Things can get a lot worse still. I can’t help but start to think how a household like ours can run into trouble despite our very cautious and conservative stance with our personal finances.

In the final analysis I’m confident that I will never be totally “poor” when I think of Evan Esar’s quip, “Character is what you have left when you've lost everything you can lose.” Even with the worst case scenario, at least I’ll still have that!