Fridays are pretty long days. I’m at school from about 8:30-4:10, then drive straight to work a dinner theater shift at the restaurant and am there until about 10:30pm. This past Friday, I ended up spending some time with a very dear friend (and spent $11, whoops) who is moving to Louisiana next week, so I didn’t get home until about 1am. No complaints, just a long day.
I walk into my bedroom to find my mail on my bed with a little post it note from my Dad attached. I turned on my bedroom light and picked up the note which read “please pay this soon, it’s in my name”.
I proceeded to open the envelope and it was a $75 charge for running a red light. Dang it red light camera!
Life’s unexpected expenses like this one seem to always get us at the wrong time, too. Now that I am an adult and am working toward financial freedom, I need to have solid back up plans for little “oops” moments like this one and for serious emergencies. As of this year, here are the two ways that I currently deal with unexpected expenses.
Side Hustle Money
In the case of the red light ticket, it’s not that I don’t have the $75, but it is definitely an expense that puts a wrench in my financial plans. I would much prefer to put that $75 towards a loan or to my wedding travel savings account (for all those destination weddings this year). However, I don’t like straying off budget too much, so instead of taking this out of money I attribute to gas, groceries, crossfit, etc, it means that I need to make an extra $75 this month to cover it. If we’re going to be really realistic here, this means that I’ll need to pick up two expo shifts (running food to tables, not actually waiting tables) at the restaurant or get this tutoring gig really up and running and complete 4 hours of tutoring sessions. Or, I could just win the lottery and pay off the red light ticket and all my student loans (just kidding, who wastes money on that?).
Thankfully, it’s a small enough amount that even though it will be more work, I will be able to cover the expense. At this point in my life, if the emergency or the “oops” is reasonable enough, I’ll just work harder to make the money to cover it instead of spending money from any budget category to cover it. That way, I’m not “out” any money, just time.
The Emergency Fund
This past summer I had to get my brakes replaced and buy new tires within about two weeks of each other. Then a week later, the AC in my car went out. I was willing to endure the 100+ degree weather for a 45 minute commute to work, but it was not so easy. The AC broke in such a way that pieces of metal were actually getting into the engine and if left alone, it would do some serious damage to the car. When it was all said and done the tires, brakes and AC cost just over $2,000. In that particular month, I had already spent my salary on loan payments and there was no way I could have waited enough tables to come up with the money in time, so I had to use about $500 from my checking and $1,500 from savings. Not fun.
Let me add in here that my emergency fund is by no means large. I am following Dave Ramsey’s “7 Baby Steps” and have not yet made it to the “Save 3-6 months expenses”. After this month, my current savings will be $2,750. This would cover all my minimum loan payments for three months, but leave very little for gas, groceries and everything else. It’s a work in progress. If this is where you are at too, don’t fret too much, as long as you have a plan and are working towards that goal. I put $250 a month towards savings and at the end of the year, that will be an additional $2,750. It’s nothing fancy, but it works for me.