Suddenly on my own, in order to ease my worries about financial security I asked myself “what if..” What if I find myself unemployed, my business making no money?
My “worst case scenario” plan is to live in the 199 square foot apartment, which would cost 80 euros (you can substitute dollars) per month, including water and the use of communal laundry room. I’d spend 20 euros for electricity. I could eat with 60 euros per month, and have a phone and internet for 35 euros. I’d make my own clothes and shop second-hand, so that would cost 5 euros a month (as I already have fabrics and yarns to make enough clothes for the rest of my life, eh.) I do need regular medication, but I could survive on 220 euros per month! You could argue that I could lose the internet connection and use free internet at the library, but let’s just give me some slack 😀 I love my internet!!
Now, if I was also providing for my daughter, it would be a little more (and the space would sure be tight, but doable – like a tiny house but an apartment). Let’s say I’d feed her for 80 euros (because she is pickier than I am and I’d want to get her an occasional treat) and spend a generous 120 euros for her other needs and hobbies and her cat if we still had one. I’d make her clothes myself or buy second-hand ). That would be 400 euros a month to keep the two of us under a roof, clothed, fed and entertained. That’s 125 000 invested with a 4% net interest to live on if I could make absolutely no money working. Or 170 000 with a net 3% interest if you want to be safer. The investment could be either a rental apartment or dividend stock, or both. If the economy gets really bad, owning real estate would be a safer bet, if the location is good, because people do need to live somewhere. So that looks like a 170 000 e apartment rented at 3% profit after expenses and taxes. Or the same amount invested in dividend stocks. Or 85 000 apartment and 85 000 stock portfolio.
I’m about to buy a second apartment and I’m thinking of getting a 14 year interest rate cap. It may seem silly because the rates have been so low fora while now and they might stay that way, but 14 years is also a long time and even with the cap, the interest rate is low, approximately 1,35%. So I have a guaranteed 14 years to pay off the apartment with the low rate. The peace of mind is worth it to me. I got a pretty good deal on the apartment, and it’s possible that it might be our home at some point. If the real estate prices down plummet soon, I might try to sell it though for a bit of profit. I’m putting 15% cash and the rest is loan for 20 years, but I may pay it off after 14 years if the interest rates have climbed a lot.
Anyway, if I own two apartments, I can always live in one and rent the other.
If I keep the new apartment long term and finances allow, I might buy a third one later specifically for us to live in. The proceeds from selling the land will go towards a third apartment or invested in the stock market. One could argue that land is good to own as they don’t make more of it, and it would be possible to even live off grid in there if things got really tough.. so that is something to think about. I’m not in a rush to sell it, but we do own it together with SBTX so something needs to be done about it at some point.
So when I get anxious feelings concerning how I will survive long term, I just think about how little I actually need to not just survive but live a content, quiet life. And I would choose living in the tiny apartment over working 40 hours a week plus commute but a big apartment and money to spend any day, no question about it!
Now, you may be starting out on your own with nothing. Or worse, you may have to pay child support to your cheater! And that is so unfair. But there are always steps you can take towards financial security and independence. You can drastically downsize and reduce your spending and start saving. Don’t carry consumer debt, pay that off first. So when (and I actually do think it’s just a matter of time) the economy crashes, you’ll be in a position where you have choices. If the real estate crashes, you can perhaps buy a small place or a piece of land where you can build a tiny house. Or you can invest in the stock market when everything is cheap. Having no debt, and better yet, having savings, will give you options many others do not have then.
Your worst case scenario plan may be moving to your parents’ house or your brother’s basement, living in an RV or a yurt! Use your imagination, think outside the box of societal norms and don’t get stuck on hopelessness.