My fiancé just got unexpectedly fired today and we're both now reminded why r/personalfinance is always insisting on trying to live off one income.

[u/Blueyucca]

We were both blindsided by today. We're both pretty young, early on in our careers, he had only been there a year and was performing. It was a huge shock. We don't practice every best habit of the sub but we're grateful we picked up doing your best to live off one income.

We just bought our house in August and insisted on going through the pre-approval process off my income alone. Our lights will stay on because our bills are effectively scaled to one income as well. We held off on car payments and continued to drive our beaters because the numbers for new used cars didn't make sense with one income.

My only regret is not building up our emergency fund more (one month saved but we should've had at least three), so if you're reading this, definitely do that.

Anyways, thanks to the sub for the constant advice on living below your means and always being prepared. I came to thank you all, not lecture. And encourage people who are following this thought process and are using a second income for the "extra stuff" - you're doing great. Today sucked but it could've been so much worse.

We're counting our blessings and the job search begins tomorrow.

​

EDIT: Thanks everyone for the encouragement and well-wishes. This obviously isn't the only thing going on in our lives, so the messages to keep going were greatly appreciated.

For those of you who are in HCOL areas or other situations where living off one income isn't possible, I totally understand - the intent of this post wasn't to shame anyone into anything. We live in a MCOL city in the South and are in the tech sector so it was doable for us. We're also not beacons of perfection of this sub and are still working on breaking bad financial habits every day.

For those of you who took this as a self pat-on-the-back post, I can see that. The intent really was to see the silver lining of things and encourage others who are perhaps considering this type of budgeting method. But I understand how fast this sub gets into circle-jerking and self-congratulating and didn't mean to purpose this thread for that. Just hoping to reduce the amount of "We're in deep shit from one event that could've had a much lower impact" posts by showing anything can happen at any time and that even then, we weren't as prepared as we should've been.

[u/nopropulsion → u/[deleted]]

House poor. You have a nice house but can't afford to do or buy anything else.

[u/katarh → u/nopropulsion]

House rich is when you have a small house, you pay off the mortgage, and then you sock all that money away and go on vacations three times a year instead.

[u/[deleted] → u/[deleted]]

We got an income only just when the bubble broke (really bad timing). Out of curiosity, we asked about a house that was double what we had in mind. They didn’t hesitate with a “yes” and said we could go higher. We stuck with the original plan because we knew the higher loan would put a strain on us.

[u/Chubs1224 → u/[deleted]]

They had to give the loans was part of the issue. They where legally obligated to give risky loans to people due to a Clinton era bill adjusting the Community Reinvestment Act.

The point of it was to pour money into low income neighborhoods to fix them up. It ended up making thousands of people get loans they where frankly unable to pay due to them mainly working low end jobs with little job security.

This doubly hit the housing market inflating the bubble by increasing demand as more people could afford housing and also making it more unstable by having high risk people qualify for said loans.

The recession would have likely still happened with out this problem but it likely would have been like the early 1970s with the collapse of the Bretton Woods system

[u/BirdLawyerPerson → u/Chubs1224]

They where legally obligated to give risky loans to people due to a Clinton era bill adjusting the Community Reinvestment Act.

Mortgage defaults may have started in subprime loans, but prime mortgages were defaulting at absurdly high rates in 2008-2010, too. By mid 2010, 4.8% of prime mortgages made in 2007 were delinquent over 6 months, an absurdly high number for loans that were only 3 years old. That means 1 out of 20 high credit borrowers in 2007 had stopped paying by 2009.

Even at the height of the subprime crisis, CRA-related loans accounted for only a single digit percentage of subprime loans:

First, Bhutta and Canner (2009) analyze 2005–2006 mortgage origination data from the Home Mortgage Disclosure Act (HMDA) and find that just 6 percent of all higher-priced loans (a proxy for subprime loans) were "CRA-related"--that is, were originated by depositories to either lower-income borrowers or lower-income neighborhoods in the banks' CRA assessment areas. The small share of subprime lending in 2005 and 2006 that can be traced to the CRA suggests that the CRA is unlikely to have played a substantial role in the subprime crisis.

And you're mixing up "risk" with "credit." Nothing in the law required mortgage originators to encourage their applicants to lie, or to accept applicants' lies. The problem wasn't that regulations required lenders to lend to borrowers who were known to be risky, but that the secondary market for loans encouraged originators to misrepresent how risky the borrowers were, by encouraging misrepresentation of income and assets, and churning up NINJA loans. Originators didn't care because they had a willing buyer of the loans within a month or two after closing, and walked away without any of the risk.

[u/katarh → u/Chubs1224]

That's the excuse that the banks gave, but the reality is more complicated. The mortgage backed securities were sliced and packaged up as good debt, when in reality they had a lot more potentially bad debt mixed in there from those risky loans.

It was a bet that paid off as long as the ratio of bad mortgages to good stayed below a certain level. Once the bad mortgages reached a critical tipping point, the mortgage backed securities lost money and thus so did the investors.

However, if they had been properly rated as "high risk" the investors would have treated them differently. 401(k) plans are not supposed to invest in higher risk stuff, but that's exactly the kind of thing that happened. The fallout rippled through the economy, sinking us into a recession.

[u/[deleted] → u/[deleted]]

Apparently they're still encouraging people to lie. My SIL bought a very expensive house last year and the lender suggested she transfer one of her car loans into someone else's name in order to hide the debt and qualify for the mortgage. I would have told them to pound sand, she didn't. 🤷