Beating Broke

Personal Finance from the Broke Perspective

Realized Benefits of Emergency Funds

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Here and on other PF blogs, you’ll hear us all talking about the need for a well stocked emergency fund.  And, unless you have one, you likely don’t know that we aren’t just saying that because we think we should.  They really do have the benefits that we claim they do.  These last couple of weeks, my wife and I realized those benefits.

Early on March 26th, my then pregnant wife told me that I should probably stay home from work as it was appearing very likely that we would be having a baby that day.  Less than two hours later, we were checking in to the hospital to do just that.  If you’ve been there, I don’t have to tell you that it was incredibly exciting.

The excitement waned as we waited for the labor to progress and then quickly disappeared altogether when the baby began having decelerations in it’s heart rate.  The doctor began making preparations and the birth was expedited.  Rather than wait for the labor to progress as it would normally, my wife was instructed to push with all she had to get that baby out.  Quickly afterwards, the baby (a girl!) was born, and just as quickly was taken to a warming table to be intubated and have her lungs and stomach suctioned and checked.

It turns out that sometime in the weeks leading up to her birth, she had *ahem* pooed in her amniotic sac.  To the medical world, it’s called Meconium.  And it’s pretty bad.  It affects the lungs in that it acts as a stopper for the little sacs that do the oxygen intake.  It also acts as an irritant to the lungs that can lead to infections.  It can be very serious, and can take days, or weeks, or months to completely clear out.

In our case, luckily or not, our little girl was able to kick it in a week.  Pretty average recovery time we’re told.  Now, she’s home and all is well.  There won’t be any lasting effects and we shouldn’t be able to tell the difference.

calculator stethoscopeHere’s where the benefits of an emergency fund come in.  For that week that our little girl was in the hospital, the last thing we wanted to think about was bills, work, or anything not related to the well-being of that precious baby.  We had friends watch our dogs, and my wife’s mother came up for a couple of days to watch our son.  And we spent as much time as we could watching our little girl fight the fight in an incubator.

We didn’t have time to balance our check book, or check our budget to make sure we were within bounds on something.  And now that it’s all over, I can honestly say that if we hadn’t had an emergency fund, it would have been much, much worse.

One of the touted benefits of an emergency fund is the peace of mind that it affords you.  When you know that you have that money to fall back on in an emergency, your mind is free to worry about the things that it should be.  In this case, it was our daughter.  Maybe it would be the car you just wrecked or the house that just burned down.  No matter what the emergency is, you know that you’ve got that extra cushion of money to help pay any bills or expenses that might come up.

I cannot tell you how wonderful it was to not have to worry about that during the week that she was in the hospital.  We certainly didn’t expect to have any problems, but we did.  You may not expect any problems, but they can happen.  If you’ve been putting off the funding of your own emergency fund, don’t wait any longer.  We’re glad we didn’t.  You never know when you’ll need it.

Photo Credit: forwardcom @ sxc.hu

Almost Time for a Winter Financial Checkup

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What’s a Winter Financial Checkup, you ask?

Winter, and more specifically, the time around the holidays is when most people have the most problems with their finances.  Gift purchases throw off their budgets.  Bonuses give them a unexpected bit of cash and they spend more than they expected.

Whatever the case may be, your financial picture might end up looking more like a Picasso than a portrait of your true financial life.  And your budget might be way off.  It happens.

The holiday season is one of the hardest to budget for.  Between all the gifts and trips that we all buy and make, it’s easy to lose track of where some of our money went or to over spend in a few categories.  But, keeping tabs on our budget is also one of the most important things we can do during the holiday season.

Performing a Winter Financial Checkup

A winter financial checkup isn’t really as special as I’ve made it sound.  It’s mostly just your regular budgeting session but with some special attention spent on predicting some of the extra expenditures.  And if you’re lucky enough, some extra incomes as well.

You’ll want to ask yourself, first, if you’re expecting any extra income.  Usually, this means a yearly bonus or a Christmas bonus.  If you are, now is a great time to plan for that extra income and budget it in.  Extra income is exactly that.  Extra.  It’s unplanned for up until now.  If you are still paying off your debt, I suggest you plan on using at least 50% of any expected bonus for debt repayment.  You’ll have some pangs of regret for things you could have bought, but in the long run, you’ll thank yourself.  The other 50% should go towards your gift purchases and towards any traveling that you are planning.

You’ll also want to take the time to truly plan your gift giving.  It’s a part of holding yourself to a budget.  I guarantee that if you walk into a store to buy gifts without a list or a set spending limit on each person, you will overspend.  Everybody does it.  It’s the spirit of the season.  Generosity is in the air, but you can still be generous without breaking your budget.  Make a list of all the people you intend to buy gifts for.  If you have any ideas for them, make sure you add those to the list.  Now, beside each name, write down the amount that you will spend on that person’s gift.  They don’t all have to be the same.  Your sister might like her $25 scrap-booking kit just as much as your brother likes his $50 tackle box.  It’s the thought that counts.  And if they do care, then you spent more on them than they deserve.

The main reason for a winter financial checkup is to keep control.  That’s what a budget is all about and that’s what will keep your spending in line and your debt shrinking.  Take the time the next time you check your finances to do a little bit extra and give yourself a winter financial checkup.

How Much is It Worth to You?

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In every purchase we make, we should ask ourselves how much is it worth to me?  It’s a very simple question, but in many cases, the answer may surprise you.  And it applies to much more than items.

Let’s try a few examples.

I’ve been keeping my eye on LCD HD receiver televisions.  With the big switchover in February and all the fear marketing going on about the loss of signals, my family may need a new television.  We don’t currently subscribe to a cable service, so we get our tv over the airwaves and will need a HD tv or a subscription to cable.  The tv’s that I’ve been looking at are in the $500 range.  Not a huge amount for tv’s nowadays, but quite a bit for my debt averse family.  Each time I look at them, I have to ask myself if having television is worth $500 to me.  We currently don’t have cable and we only receive one channel over the air.  And to be honest, it wouldn’t be a huge loss to us.  Except.  Except that I like to watch Football in the fall.  Except that my wife is addicted to COPS.  Except.  Except.  Except.  With each exception, the TV or cable subscription becomes more and more worth it to me.  I become more willing to spend the money to get the TV or Cable because of them.

Much like cable, there are some services that demand the question too.  In my hometown, there is only one full service gas station.  All the rest are self service.  The full service station charges $0.02/gallon more for their gas.  This is a non-question for me.  I don’t mind filling my tank up.  I only end up filling up about once a month, so it isn’t a big deal if I have to stand and pump gas for a few minutes.  However, with temperatures falling (it’s about 30 here today) I can certainly see why there might be some people who are asking themselves if the extra $0.02 per gallon is worth staying in the warmth of their car while someone else fills the tank.

The more my wife and I budget and track our money, the more often I find myself asking this question.  Is this service or that item worth the extra money?  Is the convenience worth paying more for or am I just being lazy?  More and more, I find that the answer is No.  In many cases, the convenience isn’t worth a little more slavery to debt.  Each penny that I spend on that convenience is another penny that I cannot use to pay down debt.  Maybe my answers will change when we get rid of our debt, but I think by then our lifestyles and attitudes will have changed significantly enough that the answer will often still be no.