emergency fund

Your Emergency Fund Needs to Be Bigger Than You Think

May 30, 2012 By Jennifer Derrick 1 Comment

A couple of weeks ago I wrote about how the “Emergency Fund” should really be called something else, since so few financial events are really emergencies. Regardless of what you call it, you need to be setting money aside to cover car repairs/replacement, appliance replacements, home maintenance, medical expenses, and all those pesky problems of life.

The thing is, we often fall into the trap of thinking that we “only” need to save enough to cover the problem. We think that if we have enough to cover the car repair, buy a new car, replace the roof, replace the air conditioner, or pay the medical bill then we’re all set. Unfortunately, most financial “emergencies” end up costing more than the cost of the problem itself. Sometimes significantly more. Here are a few examples:

Car Problems

If your car dies or reaches the point where repairs are no longer cost-effective, you need to replace it. Unless you’ve already picked out what you want next, the smart thing will be to shop around, compare prices, read reviews, and do a lot of test driving. This is going to take time. In the meantime, unless you have another car handy, you’re going to have to take public transportation or maybe rent a car to drive for a couple of weeks. While you might have a savings account with $10,000 to cover the cost of a decent used car, do you have enough to also cover the cost of a few weeks worth of car rental or public transportation?

Medical Expenses

If something serious happens to you (or even if it’ s not that serious, but incapacitating, like a broken leg or arm), the cost of your medical treatment is going to be only a part of the expenses you’ll face. You may have to pay for more meals out (or delivery) if you can’t cook. You might have to pay for childcare if you normally stay at home with the kids but you can’t care for them because of your medical problem. You might have to hire a cleaning or yard service to handle routine chores for a while. It’s great if you have a few thousand socked away to cover the medical payments, but you need more to keep your life running while you’re down.

Appliance Replacement or Repair

If your air conditioner or heater dies on the hottest/coldest day of the year (and they will because I believe they wait for those days), it may take a while to get a replacement up and running. Between gathering quotes, doing some research about what you want/need next, and waiting for an installation or repair crew to become available, you could be without heat or AC for a few days to a couple of weeks. If you can’t crash with family or friends, you’ll probably need to go to a hotel. If your fridge dies, you not only have to wait a few days to pick out a new one and have it delivered, you’ll have to replace the food you’ve lost and you’ll probably be eating out non-stop for a few days. Can your savings absorb not only the cost of the appliance plus the other costs?

Natural Disaster

While your insurance (ideally) will pay for you to live somewhere else if your home is damaged in a natural disaster to the point you can’t live in it, you may not get the money right away. Do you have some savings that you can use to get into a hotel? Your insurance may only pay for the hotel while your house is repaired; you might have to pay for all of your meals. Do you have enough saved to pay for three meals per day for a couple of weeks, or longer? Even if your living expenses are covered, if you’re without power for a few days, you’ll lose the contents of your fridge/freezer. Can you replace that food? (Some people file this sort of thing on their homeowner’s policy, but I don’t recommend it because you’re going to have increased rates for something that isn’t that big of a deal.) Your homeowners’ policy might be great, but it won’t cover everything.

You might find that other sorts of events have their own extra costs associated with them. It’s rarely as simple as just paying for a new car or appliance, or letting your insurance handle all of the medical payments. There are often expenses that you have to pay that you might not have prepared for. Sure, you might be able to float reimbursable expenses on a credit card, but if the insurance company doesn’t cough up the money before the bill is due, you’ll end up paying interest. When your establishing your emergency fund, make sure you add in extra to cover the collateral costs that these kinds of events bring with them.

(Photo courtesy of swimparallel)

Is There Such A Thing As An Emergency?

April 19, 2012 By Jennifer Derrick 6 Comments

Financial writers (myself included) often talk about the “emergency fund.” This is money you set aside so that you can pay for things like medical expenses, car repairs, home repairs, or some other sudden, necessary expense. Having extra money set aside means (ideally) that you don’t have to pull out the credit card to pay for these expenses.

But is there really such a thing as an “emergency” when it comes to financial matters? I’m not so sure there is. My dictionary defines “Emergency” as: “A serious, unexpected, and often dangerous situation requiring immediate action.” “Unexpected” is the word that hangs me up. Most of the things that we encourage people to save up for are not unexpected. They may happen at an inconvenient time or on a day you wish they wouldn’t, but most, if not all, financial emergencies are expected and can be prepared for.

I think that when we call them “emergencies” we’re letting people off the hook. It’s like saying, “It’s okay that you had to go into debt for that because it was an emergency. How could you have known?” The thing is, you can know and you can prepare. You may not know the exact date or time that the problem will occur, but you can be sure that a car will break down or wear out, that a storm may damage your house, that you might get sick, or you might die. You can know these things because they happen in life. You hope they don’t, but they do. Sooner or later these problems happen to everyone because it’s just the nature of life. Here are some examples:

Car Problems / New Car

Cars, by their very nature, are breakable. They either wear out or get into accidents. You know that at some point you’re going to need a car repair or a new one, so you should always be saving for the repair/replacement. The death of a car should never be considered “unexpected.”

Medical Expenses

You may not know exactly what will go wrong with your body, but human bodies are breakable and prone to illness. Something is likely to happen to all of us at one point or another. We may get into an accident, fall down the stairs, catch a disease, or get cancer. At the very least (and if we’re lucky) we will get old and there will be health problems that come along with that. You should always be putting money aside to cover the health issues that you will surely face.

Death

It happens to everyone. You may not think that you, your spouse, or your kids will die tomorrow, but it’s possible. You should have life insurance, a will, and be prepared to deal with the financial aspects of death. No want wants to think about death, but it’s a fact of life and not “unexpected.” As they say, no one gets out alive.

Appliance Breakdown

Like cars, appliances will break and need repair or replacement. And you can be pretty sure that it will happen at the last convenient time. You should always be saving for replacements and repairs.

Natural Disaster

If your house is leveled by a tornado or a hurricane and you live in areas prone to those events, it’s not unexpected. You have to know what sort of weather your area receives and prepare for natural disasters accordingly with insurance and savings.

What you have to do is stop thinking of everything as an emergency and instead start thinking of it as something that you can prepare for. That puts the control back on your side. You can save money, get good insurance, keep your disaster kit handy, and take what steps you can to protect your health and property. If something unfortunate happens you’ll be prepared, not running around in a stressed, emergency state of mind.

What you’re really setting money aside for in your “emergency fund” are expenses that come up at unknown times. You know you’re going to need a new car, but you don’t know if you’ll need it tomorrow (because of an accident) or three years from now (because it wears out). You know your home will need a new roof, but you don’t know if it will be because of the storm that hits next week or because it wears out after twenty years of use. You know you’ll probably have some sort of medical issue but you don’t know if it will be because you fall down the stairs next week and break your arm or because you get into a car accident two years from now. Or, because you simply get old and need care.

The point is that, while you cannot know the exact date and time that financial events will occur, you can know that they may happen at any time and you can prepare and save accordingly. You can set money aside, insure yourself properly, keep disaster kits on hand, and have a plan in place to deal with these things. Instead of feeling out of control and at the mercy of emergencies, you can plan, prepare, and face life confidently.

(Photo courtesy of davidsonscott15)

10 Important Personal Finance Lessons Every Person Should Know

April 2, 2012 By Dana O. Crandell 6 Comments

Managing your money is hard and the current times make it more so. The fact is, though, it’s never been more important to get a handle on your personal finances than in today’s economy. Regardless of whether you’re a wage earner or one of the growing number of self-employed individuals, knowing where you stand financially is critical to ensure your success and perhaps even your survival in this tough economic climate. Here’s a list of important financial lessons, offered in the hope that readers won’t have to learn them the hard way.

Start and Maintain a Budget

As difficult as it may be to believe, not creating a budget is still the most common mistake people make in managing – or mismanaging, as the case may be – their money. Trying to juggle your money and bills without a budget is like performing a high-wire act without a net; eventually you’re going to fall and the damage may be irreparable. Preparing at least a basic record of how much you’re earning and where it’s going is the first and most important step in assuring financial security.

Set Financial Goals and Work Toward Them

The harder we work, the easier it becomes to get caught up in a never-ending cycle of work and rest that leads nowhere. If you’re living to work, rather than working to live, it’s probably because you haven’t set goals. We all need to be working toward something to measure our success. Think about where you want to be in 10 years, 5 years, or even next month and focus on getting there. The prize itself doesn’t matter; it could be a European vacation, early retirement or a pedicure. The point is to have a target and use your budget to get there.

Build an Emergency Fund

No matter how faithfully we plan, emergencies happen and nothing can break the budget and the bank quicker. The best way to avoid disaster is to plan for it. Emergency cash should be an integral part of your budget and it should be contributed to faithfully. It’s also important to determine your definition of an emergency. A broken garage door probably qualifies; tickets to the Megadeath concert probably don’t.

It’s Never Too Early To Invest in Your Retirement

No matter what you do for a living, chances are you won’t be able to do it forever. Most of us don’t want to. Many never have the opportunity to enjoy their golden years, even though they’ve worked hard to get there. With the cost of living soaring daily, too many individuals forced to retire end up working at least one job just to put food on the table. The way to avoid the trap is to start building up retirement funds as early as possible. Whether it’s investments, corporate plans, or simple savings, everyone needs a retirement plan.

Health Insurance is an Investment, Too

Accidents or illness shouldn’t wipe out your emergency fund or put you in debt for life. Hospital stays and medical care can devastate your finances and your credit in a heartbeat – pun intended. Be prepared for the worst with health insurance. If it isn’t provided by your company, shop around and find the best plan for your lifestyle, but don’t go without it. Like it or not, health insurance is a necessity and needs to be budgeted for.

Credit is a Double-Edged Sword

This should come as no surprise if you pay attention to the news. Over the past several decades, easy credit has been the downfall of countless individuals, families and even major corporations. There’s nothing like a credit card or line of credit to provide purchasing power. There’s also no quicker way to break that budget I keep referring to. When that happens, and you’re unable to repay the debts you’ve accumulated, you’ll find those once-friendly creditors will be closing their doors to you, as well as the door to your future. Use credit sparingly and be sure to include your payments in the budget.

Know How to File Your Income Tax Return

Even if you pay a tax preparer each year, you should know how to file your own taxes. Even the most honest tax rep or accountant is capable of making an error and if you’re not capable of recognizing when something’s not right in your tax return, you may end up losing benefits you should have received. Worse, you could end up owing back taxes with expensive penalties. You need to have at least a basic understanding of the process to avoid real trouble.

Look Before You Leap

Wise money management requires a slow, careful approach, from preparing the budget to investing and purchasing. Anything that affects your future is worth taking the time to consider and nothing will affect your future like finances. Before you buy that new iPad, consider whether there’s room in the budget, and then wait a month. If you still think you need it, it will probably be less expensive by that time. Before you invest in that new hot stock, take the time to research it. Remember your goals. “Haste makes waste” is a valuable principle in the world of finance.

Learn Not to Waste

Remember the adage, “Waste not, want not”? Unfortunately, many of us, especially in the U.S., never really learn the value of that statement. We prepare bigger portions than we should eat, make impulse purchases and forget about simple things like turning off lights and unplugging cell phone chargers and other devices around the house. We pay huge utility bills while neglecting to check and replace weatherstripping and repair leaky faucets. Learning to be frugal can make a tremendous difference in the money left over at the end of the month.

Don’t Forget the Purpose of the Budget

If it seems I’ve been mentioning the budget a lot in this article, it’s because I have, and with good reason. The purpose of preparing the budget in the first place is to ensure that you don’t spend more than you make. Adhering to this single, basic principle is the financial strategy that will get you farther than any magic formulas you may find.

(Photo courtesy of j.o.h.n. walker)

Take Financial Control of Your Life

June 20, 2011 By Jennifer Derrick 8 Comments

I have a relative who is at the mercy of every tiny financial bump in the road. When the dog has to go to the vet, or gas goes up two cents, or the power bill is higher than expected, or the car needs new tires, he is thrown into chaos. He hasn’t got the money for these things so everything becomes a crisis. It all either has to go on credit cards or be borrowed from family and friends. Since things like this happen in life all the time, this man is rarely settled. He’s constantly juggling accounts, working two jobs, and running around asking/hoping for money. He’s always changing jobs, looking for one that pays just a little but more. As if it will help.

It would be different if he genuinely had no money. But he makes a good salary. He just chooses to spend it on new cars, a luxury apartment, and a “lifestyle.” One day he asked me for money. (I declined because I think that at age forty-one he needs to sort out his own mess, not rely on others to do it for him.) I asked him in turn why on earth he chose to live like this. Why did he want to live life constantly putting out fires? Why did he want to live with that kind of stress all the time? Why didn’t he want to be in control of his life instead of being buffeted by every little thing?

He just shrugged and said there was never enough money to go around. Right then I knew this guy was hopeless. He’s not motivated to change and he isn’t willing to give up his lifestyle, even a little bit, to get more control over his life. To each his own, but I know it can be different.

If you’re tired of feeling out of control every time an unexpected expense crops up, I encourage you to take control. You don’t need millions in the bank to be in control of your life. You need some money set aside so that you can cover yourself if you have to take a pet to the vet, or pay out of pocket for a prescription, or deal with rising gas prices without turning to credit cards, loans, or family members. Ideally you’d have six months of expenses saved up so you could deal with life even if you lost your job. But even if you can’t save up that much, a couple of thousand dollars will make a huge difference in your chaotic life.

People always say that they can’t come up with that kind of money, but I rarely believe it. You can get that from your tax refund, from cutting out unnecessary expenses, or by diverting $20 a week from your paycheck. Unless you are living at poverty level, it’s not that difficult to stash a couple of thousand dollars in a savings account. Once you have the money, keep it liquid so you can use it to pay for your expenses. Don’t touch it for anything other than emergencies and if you use it, replace it as soon as possible.

It may not seem like much, but having some extra money can be very liberating. Suddenly life isn’t in control of you, you are in control of life. You don’t have to freak out every time a bill comes due. You don’t have to beg for money or rack up credit cards. You don’t have to panic if your company starts talking layoffs. You have a lot less stress in your life. You can focus on more important things. You’ll find that once you have that money, other financial things start improving, as well. Your debt goes down and you get motivated to save for other goals. Your health will probably improve, too, since you’re not under constant stress.

Think about it this way, if it helps. Instead of saving money, you are paying money (into your savings account) to help you get your stress under control and achieve a better life. It’s cheaper than therapy. Living a calm life is much better than living life in a constant state of panic and fear. And you can achieve it without having millions in the bank.

Use the Emergency Fund or Not?

April 14, 2010 By Jennifer Derrick 13 Comments

I have a friend who recently lost her job. She’s not the only income earner in the household, but she does contribute a good bit to the family’s finances. Fortunately, she has a three month emergency fund saved up. However, her proposed management of that fund leaves me scratching my head.

On the day she lost her job she came to me and said, “Well, that’s it. We’re going to have to hit the emergency fund now for our expenses.”

I asked if things were already that bad.

“Well, no, but this is an emergency so it’s time to tap the fund.”

“Have you cut your expenses back so that maybe you can live mostly on your husband’s income for a while?” I asked.

“No. Why would we? We have the emergency fund. It’s for three months’ of expenses so we don’t need to cut our lifestyle down. We’ll just use the fund to bridge the gap. We’ve saved for this eventuality, so we’re going to keep going as we always have. We’re even going on vacation in June.”

“But if you cut back on your expenses for a while, that fund will stretch much longer. What if it takes you more than three months to find a job that pays what you were making before?” I asked.

“It won’t,” was her answer.

I left it at that, but I had to wonder: At what point do you throw in the towel and rely totally on your emergency fund and how much should you try to avoid touching it for as long as possible?

When we’ve gone through layoffs or other financially tight times in this house, we’ve done everything we could to avoid touching the emergency fund. We’ve picked up extra freelance work, taken part time jobs, and scaled way back on items like cable, travel, entertainment, and eating out. Our rationale is that we would rather curtail our lifestyle for a short time and rest secure in the knowledge that the emergency fund is there, in full, if things should get really bad.

As long as we can cut expenses or find other sources of income, that fund remains untouched. It only gets touched if the income dries up, the expenses can be cut no further, or the disasters just pile up too fast to deal with them (a layoff, compounded by a leaky roof, with a side dish of medical problems thrown in, for example). While we’ve had to resort to the fund once or twice, we’ve almost always managed to pull together enough income and expense reductions to keep afloat without touching it at all, or by only withdrawing a small amount to cover us until a freelance check comes in, for example.

My thinking is that you never know how long it will take to find work. A few years ago you might have had a new job in a week. Now, except for certain fields, you’d better plan on a few months. If you’re relying on your fund that entire time, you could be in trouble if your search outlasts your fund. You also don’t know when your spouse might also be laid off, or you might get sick, or you might get in an accident, or any other of a thousand things that can derail you financially. It’s better, in my view, to save that fund for something that cannot be dealt with any other way. If you can reduce your lifestyle or bring in any income, it’s better to do that than touch your fund.

My friend has a different philosophy. She figures that they saved three months of expenses, so they might as well use them. She’s out of work, so she’s going to use the emergency fund to replace her salary. She’s not going to downgrade her lifestyle or look for part time work. To some extent I can understand her point of view. You save for an emergency so why not use those savings when something happens? But what’s she’s failing to consider is what happens if that emergency gets worse? What happens if her husband is laid off, too, she still hasn’t found a job, and the fund is depleted?

She and I differ on our view of an emergency. She defines an emergency as something that will inconvenience her. It will be an inconvenience to cancel cable or switch to a pay as you go phone. It will be an inconvenience to work at Target or try to pick up some freelance work. She would rather use her emergency fund to avoid being inconvenienced. I, on the other hand, view an emergency as something that I cannot deal with on my own. An emergency is when both of us are laid off, there’s no freelance or part time work to be found, our expenses are down to the bare minimum and we’re dangerously close to having to miss a payment on a bill. That’s the time to touch that emergency fund. Only when things can’t be solved any other way will I dig into the emergency fund. It’s safer to keep that fund untouched for as long as possible so that if the time comes that I have to use it, I still have it all instead of having a fund that’s decimated by months of paying for cable, trips, and restaurant meals.

Who’s right? There are valid points to both sides and I think to some extent it depends on your level of risk tolerance (or maybe how optimistic you are). If you’re okay with facing a worsening emergency after your fund is used up, then by all means use it at the slightest hint of inconvenience. If you crave safety and security, you’re better of leaving the fund untouched for as long as possible. So, what’s your opinion? Would you touch the fund at the first whiff of trouble, or would you hold on to the money, finding other ways to make ends meet for as long as possible?

Dave Ramsey Financial Peace University: Week 3

March 4, 2010 By Maggie Ellis 10 Comments

This is a series of posts about what you will find in Dave Ramsey’s Financial Peace University course. This is week three (week one and week two)

The lesson for this week was cash flow planning, also known as budgeting. You could see everybody approaching this lesson with trepidation. Not only does it mean more work, but it means finally revealing the true depth of their financial problems. Many people have avoided this because they just don’t want to know how bad it is. I sympathize. When we were first getting serious about money, we sat down to make out our budget and had one of the least fun evenings of our lives. We weren’t in bad shape, but it was a pain to dig out the bills, receipts, and ledgers for everything related to our household. You don’t realize how much is going on until you lay it all out and try to make some sort of order out of the chaos. I can honestly say I wasn’t looking forward to doing it again as part of this class. However, I vowed to suck it up and do the activities as if I’d never budgeted before.

The main idea is that we are to create a zero based budget. This means that every dollar is accounted for and “spent,” even if that “spending” is really putting money into savings. At the end of the month, my take home pay should all be allocated to categories and spent. Nothing should be left floating in the ether. Any extra money that you find in the budget is to be applied to the baby step that you are working on, whether it’s paying down debt, building an emergency fund, or saving for retirement. The point is to make sure that every penny of your money is working for you in the best way.

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Dave Ramsey Financial Peace University: Week One

Dave Ramsey Financial Peace University: Week Two

Dave Ramsey Financial Peace University: Week Three

Dave Ramsey Financial Peace University: Week Four

Dave Ramsey Financial Peace University: Week Five

Dave Ramsey Financial Peace University: Week Six

Dave Ramsey Financial Peace University: Week Seven

Dave Ramsey Financial Peace University: Week Eight

Dave Ramsey Financial Peace University: Week Nine

Dave Ramsey Financial Peace University: Week Ten

When I flip to the back of the workbook, I am pleased to see that the budget forms are comprehensive. There’s not much left out and everything gets broken down into monthly expenses to keep you from being surprised by big, irregular expenses like taxes, insurance, and Christmas. My big gripe with the budget sheets is that Dave wants us to put giving first. Giving it the first line item on the budget sheet. That should be the first thing you “pay” each month and then everything else gets paid after the giving is taken out.

I understand his point, from a Christian perspective, but I simply cannot get my head around someone in deep financial crisis giving away ten percent of their income when they are having trouble paying the mortgage or utilities. I think ten percent off the top is a fine and wonderful goal to aim for once your finances are under control, but I don’t think it should be part of a beginning budget for people in crisis.

Dave wants us to give off the top, but then turns around in the lecture and contradicts himself when he talks about the “four walls of the home.” These are the things he says we need to pay (in order) when living in crisis mode: Food, shelter, utilities, and clothing and transportation. There’s no mention here of giving off the top. I find the four walls theory to be more appropriate for someone in danger of losing it all. Too many people these days are confused and paying credit cards or giving to charity before paying their mortgages. If you’re in crisis, you need to sustain yourself first. Everyone else can take a number and get paid later, including the charities.

Dave does a good job of showing why budgets often don’t work: You don’t actually live the plan, you leave out important things (whether intentionally or unintentionally), or you use it to control another person. He then points out that budgets are not as restrictive as they seem at first. A budget is less about telling you what you can’t do and more about telling you what you can do. There is no rule that you can’t spend on eating out, as long as you have the money to do so. A budget shows you where your money is going and tells you if there is any (and how much) left over to eat out (or buy a DVD, or travel, or whatever else you want to do). If you have the money, you can do whatever you want. There are no absolute “cant’s” in a budget, which is what most people believe. You can save for and prioritize anything you want, once your basic needs are met and your debt is under control.

Near the end of the class, Dave hits upon the most important reason to budget. We all work too hard to end up with nothing in our golden years. By creating and sticking to a budget, we can direct our money to the places where it will do us the most good, both short and long term. Without some sort of plan (budget), you’re likely to end up at retirement age with nothing saved, too much debt, and no idea what to do next. This is advice I can get behind. I don’t want to work for forty years and end up with nothing. I found this class to be the best and most practical, so far. This is the reason why so many people are here: To get control of their money so they have more freedom. A realistic budget is the first step and, for the most part, Dave’s budget system is a good one.

Dave also wants us to start using the envelope system. This is not for bills that are automatically drafted or normally paid by check, like utility bills and the mortgage. Envelopes are for things that you typically pay cash (or use the debit card) for like groceries, clothes, and dining out. The idea is that you set aside the budgeted amount of money for each category in cash in a separate envelope each month. When the cash is gone, the spending in that category is over for the month. If you’ve budgeted $300 for groceries, you pay cash from that envelope each time you go to the store. When you reach $300, you’re going to have to live off of what’s already in your pantry.

I get the idea of this. Envelopes keep you from overspending and they force you to budget a realistic amount for your purchases. It’s one thing to say, “I only spend $200 on groceries each month,” and another to discover that the $200 is only one trip. A couple of months of eating weird meals you’ve scraped together from the pantry will force you to budget a more honest amount for food.

I will try this system because we’re supposed to, but I confess it makes me uneasy. For one thing, I’m not thrilled about keeping that kind of money, in cash, in the house every month. I don’t live in a high crime area, but anything can happen and I’d hate to lose $1,000 in monthly expenses in cash. For another, I use my credit cards for many of my expenses to get the rewards points, then pay them off every month. This totally goes against all of Dave’s advice, but I find those rewards programs to be valuable to me. I understand that those with credit card problems should not live this way, but for me it makes sense. I’m not thrilled about giving up my rewards for a couple of months while I try this system. But, who knows? I could love it, so I’ll figure out my expenses and give it a try.

When we got to small group, most people were looking shell-shocked. They were thumbing through the workbook and looking at the forms we have to fill out this week. I heard some grumbling that they didn’t have the time for this. I’ll admit it: The forms seem intimidating at first, but really they’re easy to use; much easier than some forms and software I’ve seen. Once everyone settled down, they expressed their fear of budgets. Some have tried and failed in the past (like diets). Some have found it too restrictive. One man said that the one time he tried a budget it ended up in disaster because he allowed himself no fun whatsoever, which ended up in an unplanned binge trip to Vegas with his buddies that set him back about $3,000 in credit card debt. After that he never tried budgeting again.

Others took the opposing view and said that they’ve found budgets empowering, but they’ve just not been able to stay on one because of weak willpower or an uncooperative spouse. The wife of the man I mentioned last week (who was proud of his financial mess), looked significantly at her husband when this was mentioned and I chuckled. Many people just didn’t want to talk about it at all. It will be interesting to see, next week, once the forms are all filled out, if anyone feels any differently.

Homework roundup: I met my goal of the $1000 emergency fund when my tax refund came in this week. The $800 put me over the top. I’m not the only one in my group who used their tax refund to make the baby emergency fund. Several people reported using their refunds to make the fund, and several more will do so when the returns come in. I will say this: Had it not been tax season, that $1,000 would have taken me a lot longer to come up with. Last week I was only up to $135. This week I got $100 from some side work that I did and a rebate check for $50 from the insurance company, plus the refund. Since I was pretending that I had no extra money in my budget, the emergency fund money was going to have to come from “found” money or other outside sources. Without the tax refund, I think it would have taken me about six weeks of side work and selling things to come up with the money. It’s definitely not as easy as it seems to scrape $1,000 together if you have nothing in your budget to work with. You’re definitely going to have to make some hard choices about what to sell, whether to get a part time job, or which services to drop.

We were also instructed to fill out our complete budgets and spending plans. As expected, this wasn’t fun. It was time consuming, too, even though I’ve done it before. I did not consult the budget that we use now, instead opting to do Dave’s zero based budget from scratch. After I got everything entered, I found that I had about $1,000 per month unaccounted for in my favor. About $100 of that went away after I realized that Dave’s plan makes no provision for pets, which we have. I still have about $900 per month that I can’t explain. No matter what I do, I cannot get my budget to zero. There is $900 somewhere that we are not spending or saving. If this is true, then I need to be transferring another $900 per month into savings. Either that or I need to be having a whole lot more fun each month.

I’ve got to do some more research to find out if this is true, or a math error on my part. I’ll pull my old budget and compare and see where I’ve gone wrong. Hopefully it’s true that things have changed somehow and I have a spare $900 each month, but I suspect math error or there’s something I’m not thinking of. If I can’t find the error, I’ll try moving $900 a month into savings and see if I run out of money. Cross your fingers and I’ll keep you posted.

Next: Dave Ramsey Financial Peace University: Week Four