My sister and I used to gather eggs from our henhouse for breakfast. On weekend mornings Mom would send us up into the ‘chicken coop’, a spacious room on the second story of our farm where we kept a handful of uncaged chickens. There were these weathered wooden boxes nailed up against one wall filled with straw that made a nice nesting place where they typically laid their eggs. On mornings when we were sent to gather breakfast, we would sheepishly extend our arms into these boxes and hope to not get pecked by the occasional nesting chicken contentedly sitting on her future brood.
If we had happened to drop all of these eggs while descending the narrow wooden steps, prancing across the rocky driveway or running the last stretch home (on a cement walkway), we would have wiped out breakfast. Though we didn’t really think of the risk at the time and I can’t remember an instance where we had to explain a heap of splattered eggs to my mother, sending young children to gather breakfast from the chicken coop had some risk to it. Even though this example does not have much risk to it aside from hungry tummies and an upset morning, it illustrates what financial gurus mean when they say “don’t keep your eggs all in one basket”. Sometimes, the bottom does fall out.
I felt this risk last week, in a very real way. Even though I am fortunate enough to be in a position where all of my eggs are not currently in the same basket, several things occurred that made both of my professional baskets faulty at the same time. It warranted the same response as if I had only one basket—a few ‘what if’ moments, the inability to focus on anything to do with work, a lot of analyzing, and a moment or two of uncomfortable heart palpitations. A glimpse onto the other side of a basket full of splattered eggs led me to think about the financial risk in our current lives, and how we are mitigating it.
There are two of us working full-time jobs so this decreases the risk to our income. However, you are talking to someone who was laid off within two weeks of Paul being laid off back in 2008. So at one point in our recent history we were both laid off from employment at the same time for a period of several months. We’ve taken the opportunity to build up a sizable emergency fund during abundant times so that if/when we experience financial setbacks, there will be something for us to fall back on. I also am working on building up my side business, Frugal Confessions, though making money at writing and blogging is a slow and gradual process. We have auto and home insurance, and I have short term and long term disability insurance due to the nature of my employment. Finally, we paid off our non-mortgage debts back in September 2010, and this decreased our monthly expenditures by about $950.
After assessing our risks this past week, I have found one weak chain link we might want to look into: life insurance. My employment has valued my life at a staggering $5,000 (that is pure sarcasm), and Paul carries a small life insurance policy that would replace one year of his income. Perhaps it is time to look into whether or not we need to insure ourselves more.
Do you have all of your eggs in one basket? What sort of risk mitigation have you done? I’d love to hear your thoughts!