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November 20, 2017

We Were (Cash) Poor for a Month, and it was Terrifying

I've been very fortunate to never have to worry about money in my life. I've never been rich or anything, but I've always been comfortable, so running short on cash wasn't something I ever worried about. All that changed at the end of last year when a series of events left us scrambling to pay our bills. Luckily, it only lasted about a month.

It's not that we were broke. We had plenty of money; it just wasn't easily accessible. We simply had a cash flow issue, and it scared the crap out of us. For example, I've always paid our credit card bills in-full as soon as I receive them. During our lean month, I had to carefully plan what bills I paid and when. I wasn't sure I was going to be able to cover everything, but we got lucky and the due dates worked out in a way that everything got paid in-full and on-time. However, it was extremely stressful. We were constantly worried about money--how much we had to pay out and how much was coming in. There's no way we could live like that for an extended period.

Here's the craziest part about all of this--the vast majority of Americans live on the financial brink of collapse all the time. A recent poll found that 78% of Americans live paycheck to paycheck, which is pretty much the situation we were in and found miserable. I don't know how they do it. Life is so much better when you don't have to constantly worry about money. So, if you're one of those 78%, we highly recommend building up some savings. Once you have a rainy day fund you will be amazed how much less stressful your finances will be. You won't have to constantly worry about the due dates on your bills or when your next paycheck will clear. I guarantee you will be less stressed out and a happier person in general.

How Did This Happen to Us?
Our cash crunch was brought on by a very unlikely confluence of events. The problem was mostly caused by our crazy car situation. We bought a car and a truck in rapid succession, paying for both in cash. That pretty much depleted our typical cash cushion. We were expecting it to be replenished by the buyback of our diesel VW, but that kept getting delayed. The situation wasn't helped by the fact that my job paid me monthly, which may not even be legal in California.

It all added up to a seriously stressful month that we will desperately try to avoid repeating.

How Did We Recover?
Initial relief came when VW finally bought back our Golf, two months later than planned. Additional, and hopefully permanent, relief came when we sold our house in So-Cal a couple months after that. We are now back to a comfortable cash cushion and we plan on keeping it that way.

Have you ever run low on cash, or do you always run low on cash? How did it happen and how did you feel about it? Let us know in the comments.

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