“We have X dollars and Y bills. What happens now?”

More than once in my adult life, I’ve had to sit down and have this conversation with myself and/or with my husband. In my household, we agree that we have “four walls” that we must protect:

1. Housing
2. Utilities
3. Transportation
4. Food

Did I ever tell you about the “doomsday list” that Jay and I came up with in 2018, following my sudden job loss? Did I ever tell you that we revisited the list three weeks ago just in case we needed to use it again?

In 2018 when our household income dropped by 60% with no notice (right after we bought a new house), we had to evaluate what our strategy was. Morally, I am not a person who will borrow money from family/friends, and I also avoid taking on credit card debt if I can help it. So, here’s our action plan to protect our “four walls”.

1. We will end casual spending (things outside necessity food items, and gas)

2. All savings account allotments stop (no more savings for the holidays, vacations, short term purchases, vet bills,etc)

3. All membership services stop (Netflix, Costco, Amazon, etc)

4. Air conditioning turns off (we’ve got portable and ceiling fans)

5. Once we’ve done steps 1 – 4, we’d start draining our savings account to maintain the bare minimums. At this point, we may consider taking on short term credit card debt–but only if we KNOW how we’re paying it off, because credit card debt is actually a brand new payment/expense mixed into the already tight budget.

6. Once we get towards the 20% mark of our savings… we’d sell one of our two cars (We go back and forth on which one. My car is worth much more, but his car would sell faster and already has less useful life in it. Either way, one is getting chopped.)

7. We’d then sell our rental house. This one is low on the list because landlords can’t evict tenants due to a sale, and our buyer pool is larger on a vacant home than it is on a tenant-occupied one. As long as they keep paying, they can stay until the lease ends.

8. We’d then begin selling items of value from the house. The riding mower, grill, TV’s, furniture, etc.

8. We’d then consider the feasibility of selling our own house (can we qualify for an apartment somewhere? Do we have a place to go?)

9. By this point, we should be scraping the bottom of our savings account…leaving just enough to cover deposits on a rental somewhere.

10. Our life should be completely downgraded, all the while…maintaining our four walls of life. If we are still struggling, we will consider hardship withdrawals from our 401k’s/retirement funds…but the goal is to break even by this point.

Personal finance is “personal”. My job is volatile, but my husband’s been on his for 8 years and has stability. Thus, our doomsday list may not look identical to yours, but ultimately… we all have the same “four walls” of life to protect.

Whether you’re already a stage or two into your own list, or you are financially secure right now, it’s always important to know what your next move will be.

Don’t “prep” by hoarding TP and forget about “prepping” your budget, too.