The question is where do you get money if you come up short. Here's my process, from bad to worst:
- Credit card. Rewards points, baby!
- If for some reason I can't put it on credit, start with the checking account - we keep a $1,000 extra balance in there, so we could get that amount in cash quickly.
- Savings account - our emergency fund lives here, along with our sinking funds. I have a little bit of money in Paypal that I can grab too.
- Roth IRAs. Not ideal, but we can withdraw contributions without penalty.
- Cash in the rest of our retirement savings. Taxes and penalties, ouch!
- Sell the house, move in to in-laws' basement. Maybe asking family for a loan should go in before this step, but it's hard to contemplate that we would get to that point without any income.
Most of this scenario assumes unexpected expenses (from furnace breaking, to death or illness in the family, to major illness/accident of one of us) and not job loss. A job loss would probably have us re-evaluating a lot of expenses as well (cell phones, internet service, eating out), which would lower our overall expenditures. I'd like to have more cash savings that we can tap when we need to, but we're still rebuilding that from the blows we've been dealt the last few years.
We are far from living on the edge, but losing an income and gaining a medically complex child with a high deductible health insurance plan has certainly taken its toll. My goal for the next few years is to continue living within our means and building up savings where possible. Someday when childcare won't be a major drain of my income, I'll go back to work and we can focus on things like college savings and additional retirement funds. In the meantime, it's good to know that we have a number of options before we are truly out of options.