You need it. I need it. ‘Oh shit!’ money covers the surprise you weren’t looking for.
- Like running over a pickaxe on a highway.
- The a/c pulley rotting out in your car.
- That visit to the ER because you were sick and it’s 2 AM.
This is NOT the money you spend on last month when you didn’t budget.
This is that handlebar in your front seat when your passenger thinks you’re going to crash. Or if they’re me, keeps their balance while you take a curve. Dave Ramsey uses this as his first step of financial peace In all reality, this is the basic step of starting. If you can’t save $1000, you’re not committed to being financially free. It’s the truth.
$1000 doesn’t cover what it used to and I think that it is short of the relief it brings. It goes faster than you think if you have a bad enough situation that you don’t plan (think car accident). So what to do?
I like using the math problem of ‘how much is my deductible?’, ‘how much is a night in the ER going to cost me?’, and ‘what’s the minimum balance on my bank account to avoid fees?’
$500(deductible) + $700 (ER visit) +$300(savings min) = $1500
So what does that mean?
Do I scrimp and save until I reach that point and go back to spending like I was?
Depends on your situation. For me, I’ve always been this side of frugal. I didn’t learn to spend money. My leftover beer money was tattoo money and I wanted my tattoos more than I wanted beer so I’d get one to make the bar happy –because I liked dancing there– and the rest was going to the next ink. I didn’t have a lot of extra money, to begin with. And starting over since I moved has been difficult. I know it’s why I haven’t slept some nights, worrying about money (I’d be worrying about something if it wasn’t money) and which bills I might not make. There were plans that didn’t become expectations. There were expectations that got reworked into other plans.
But the first lesson you learn with finances is that you buy now and pay now or you get later and pay later. It works every single time. If you have issues thinking about $1000, start with $300, start with $100. It’s all a matter of beginning the process and then taking a look after you reach that goal and getting to the next.
Saving and Trust
I’m going to tell you about an ex of mine. Something about him bugged me. But I could never figure out what it was until a year later when I realized it. He had no idea how to save money.
At the beginning of our relationship, I was living at home and minimal expenses because I didn’t have to pay rent. I was saving well and paying off a car that may not have been the best long-term choice since I have already replaced that car, but I digress. He and I worked together and made the same pay. I figured that he had other expenses and was also paying off a car and that was why he wasn’t saving money. After a while, he got a promotion and a raise, and I moved out of my parents’ house because one of us wasn’t going to live much longer if I stayed (I still don’t know who would have died in that scenario, we were all in each other’s space too much).
I still continued to spend like I had because I had paid off the car, I was still getting a little bit into savings every month or breaking even with my income. I started paying back my student loans fully at this time so I was making progress on this, even though I really was only paying the minimum. I was expecting to get a similar promotion or change jobs for more money so I wasn’t too worried about it.
Back to him. He was making a dollar more than me, required to actually work a full 40 every week. Had his vacation regularly deposited and cashed out every six months like the rest of us. He was deferred on his student loans because we were still making below the recommended amount (what it is, I don’t know). He paid less in rent and utilities combined than I did. His car was paid off about the same time as me. But his regular balance in his account was under $500. He paid the minimum on his credit cards. He made excuses about how much debt he had. (He also said he wanted to get married, but there were other things we didn’t agree on, again digress.)
I couldn’t trust him, because I wasn’t sure if that was how our joint accounts were going to always be. Scraping together the rent and other expenses. I can’t live that way. Always transferring money at the last minute to cover things. The last six months of waiting till one check drops to account A to transfer it to account B (because I have checks for account B) drove my nerves to a level I never want to be at again.
Choosing your sacrifices
The financial advice all over the internet is about cutting this thing and that thing and sometimes that’s good. Just like Lent isn’t just about cutting something out of your diet to cut it out. It’s supposed to be something that you have to think about and decide that you want to save instead of having the splurge (I had a friend give up cheese last year- I would have starved because that is half my diet).
It’s choosing when and where to splurge, rather than just blindly doing something.
It’s thinking about your choices rather than just following what someone in front of you is doing.
Paula Pant over at AffordAnything.com regularly reminds everyone (it’s the banner) that you can have anything you want… just not everything. I like this reminder because it’s true in the simplest part of things. Anything you want is at your fingertips but you give up something in return. I want to own property and use it as my passive income source. I don’t make enough in five days working just 40 hours. I can either give up one of my days and do a side hustle (eg. writing) and make money that way so that I can have my dreams.
So who wants to be a millionaire?
Have you made your commitments to your goal or are you still staring at the starting line in the jeering section?