Photo courtesy of Paul Keleher
When things are running along pretty well it becomes easier and easier to settle into a routine of saving money, making frugal choices and avoiding new debts. However, if your life is like mine, just about the time you get settled something comes out of nowhere to completely derail your plan. Earlier this year Murphy came to visit (you know Murphy, if it can happen it will). We went through a few demoralizing weeks with problem after problem–things breaking around the house, people getting hurt, etc.
Then we were cruising along ready for a new school year for the kids when my Mom was diagnosed with a giant cerebral aneurysm (she has been hospitalized in ICU for the past 37 days following treatment). Daily trips back and forth to the hospital have doubled our gas budget (the hospital is about 30 minutes from our home). Our eating-out budget has gone up as we were often forced to grab something fast in between visiting hours. The good news is we have made the budget adjustments and avoided taking on new debts, or withdrawing from our emergency fund. Here’s how we are making it work:
- Loosen up, but stick to core frugal principles. In a qualified crisis it seems a bit petty to be concerned with pinching pennies, so we have relaxed things a bit by lowering our debt snowball budget. This allowed us to bump up a few categories that will undoubtedly increase while caring for my Mom.
- Keep priorities in order. Loosening up a bit does not mean you have a license to go on a shopping spree. Many times this is the first reaction to crisis, particularly for reformed emotional shoppers such as myself. No, buying things may make you feel better by creating a diversion in the short term, but when the bills settle and the “newness” of your purchase wears off, you will feel even more guilty over spending the money which adds to the depression you might already be experiencing.
- Make budget adjustments as needed. My wife and I are normally reluctant to modify our monthly spending categories. However, in an emergency a budget committee meeting may be in order. Try to keep your overall budget amount the same by reducing non-essential categories to make room for essentials. For instance, in our case food and gas increased almost immediately, so we reduced “Entertainment” and “Gifts” budget categories. It won’t get us invited to many birthday parties, but you have to do what you have to do.
- Be less aggressive with debt reduction and savings plans. Like I mentioned above, we’ve scaled back a bit on our aggressive plans to pay off debt. As much as I’d like to finish off our remaining balances, it just doesn’t make sense to stretch too far and have to turn right around and dip into our emergency fund, or even worse, borrow money from the credit card we are working so hard to pay off.
- Get back on track as soon as possible. In the early stages of an emergency you find yourself sort of going through the motions. However, as things stabilize you will find yourself slowly returning to your normal routine. When you recognize this is happening you can rebalance your budget categories and get back on track with your original goals. Remember through all this that your family is your first priority–not Discover Card. If it comes down to feeding your family and keeping the lights on, or paying your credit card payments, those other guys will just have to wait!