Risk

It's the start of the Advent season today, and the minister at church gave us a list of topics for the coming week on which he asked us to write devotionals.  Well, looking at the list of the topics for the coming week, it occurred to me just how much relevance these topics have to what my wife and I are trying to do to our debt, namely crush it out of existence and wipe its memory from the face of the Earth.

The topic for today was risk (as opposed to Risk, which is a board game).  It occurred to me, looking at this topic, that in trying to wipe out a ton of debt in a very short amount of time, there is more than a little risk involved.

The biggest element of risk to me seems to be that, in putting extra money toward debt, should something unforeseen happen, that money can't be reclaimed, at least not without a home equity loan or line of credit (which of course just deepens the debt and is, therefore, antithetical to what we're trying to do).  In lieu of bolstering our Rainy Day savings (about $2,400 right now), we're throwing every available cent toward these debts.  As of the first of the year, we're even suspending our IRA contributions for a couple of years.  Our IRAs right now total a little over $40,000, so we're not in a bad place retirement wise, but we could be putting a collective $10,000 extra toward that amount every year were we not retasking it to pay down the debt.  On top of all that, there's also the risk that one of us could lose a job, decreasing our income by a substantial amount.

So what do we do about risk?  We plan, we prepare, and we screw our courage to the sticking place.  Yes, the Rainy Day savings we have is small, but should the unforeseen happen, it is enough to tide us over, especially considering that all it takes is the click of a mouse button to stop sending extra money toward our mortgage and put it instead toward whatever emergency may have befallen us.

Yes, every financial pundit would call us insane for suspending our IRA contributions, but the amount we already have will continue to grow, and IRAs are good for "traditional retirement", the sort of retirement which goes hand-in-hand with the thought process that you'll be paying on your mortgage until you die, or close to it.  Once we pay off our debt, my wife and I plan on working toward an early retirement -- not at 55 or even 50, but earlier, and hopefully much.  Something like that is much easier to accomplish if you reduce your yearly expenditures by several thousand dollars because you no longer have debt.

As for the possibility of losing a job, much like a good investment portfolio, our employment is diversified, with the two of us working about five different jobs between the two of us, and from several different employers.  Should one of us lose one job, we still have several others to help fill the void.  Is it possible we'll lose two or three jobs between us?  Of course it is, just as it's possible a wayward asteroid no one has yet caught on their telescopes will plummet through the atmosphere and annihilate our home and us with it.

Risk is all about degrees and tolerance.  Everything is risky to some degree.  Driving a car to work is risky.  Putting money in the stock market is risky.  Falling in love is risky.  Yet people do these things and things far, far riskier every day.  What is important is going in with your eyes open, fully knowing what might happen, and accepting of those possible consequences.

What's life without a little risk?