An illness short-circuited my career and finances. Here’s how I rebounded

At 28 years-old Gabe Lumby was climbing the ranks at an accounting firm in Springfield, Missouri when his life—and finances—took a major turn.

“I went through some health struggles that resulted in surgery and a diagnosis of Crohn’s Disease,” the now 31-year-old says. “My ability to work the regular 9-5 plus a lot more during tax season was pretty much over with.”

Compounding the situation: Lumby’s wife Brittany was a stay-at-home-mom and the couple had just had their second child.

Since he could no longer handle sitting at a desk for long hours, which could reach 70 hours per week certain times of the year, in 2015, Lumby decided to work for himself. He would launch a niche accounting practice that could service small businesses remotely, and collaborate with his brother to create a financial education website at cashcowcouple.com.

While he had a clear plan for the future, his family’s finances were taking a hit. Here’s how he maneuvered a rocky situation and made his way back to financial health.

Embrace frugality. One thing in Lumby’s favor: he was never a lavish spender. He also took advantage of credit card rewards. He and his wife would make day-to-day purchases on credit cards to get bonus points and cash back, then pay the entire balance so they didn’t incur interest charges. “Those little things add up,” Lumby says.

Save for emergencies. Not wanting to take on any new debt, the Lumbys lived on the six months of expenses they had saved up in their emergency fund while Lumby worked to get his businesses off the ground. By the end of month five, the business’s monthly revenue was enough to pay for all business and personal expenses, thanks to their thrifty lifestyle.

Re-stock the emergency fund. Since the family had spent most of their savings, Lumby focused on rebuilding the emergency fund first. As the business started making more money, he banked their profits. The goal was to keep two to three months’ expenses in a savings account.

Get back on track with retirement. Because money was tight, Lumby had stopped contributing to a retirement plan for about a year as he built his business. “This obviously wasn’t great for my finances, but it was a sacrifice that definitely paid off,” he says. However, as soon as the business was sustainable, he started contributing to an IRA.

The key to success was being willing to wholeheartedly embrace a new life, Lumby says. “You get in a routine and then something happens to throw a wrench in that, and it takes you a while to adjust.”

More advice on bouncing back after a life event derails your plans: 

While we often focus on economic recessions, we can expect to at some point go through a personal recession, says Andrea Williams, a Chicago-based financial adviser with Northwestern Mutual. Here’s how to handle a sudden loss of income.

Create a new budget.  Whether you’re laid off or living on less income for another reason, don’t try to live the same lifestyle as before. Extra expenses could end up on a credit card, creating additional debt.

Consider alternative sources of cash. If you deplete your emergency fund, try not to touch the retirement account, Williams warns. Instead consider other options such as borrowing from the cash value of a life insurance policy, tapping equity from your home or even leveraging a loan from a traditional bank. One thing to avoid at all costs is a payday loan. “That can spiral into a vicious cycle of interest and penalties,” Williams says.

Play catch-up. Once your income starts to recover, maintain the no-frills lifestyle you were living for a while longer and put disposable cash into your emergency fund. The goal: To have three to six months of living expenses. “Then pay down any debt that you accrued while you were out of work,” Williams says. If your retirement contributions stopped or decreased during your crisis, increase the amount you put away as soon as possible. If not, “you’re missing out on money that could’ve been in the market and growing.”