Another post about WANTS and NEEDS

**Joan.of.the.Arch** · 03-11-2010, 06:55 AM

I appreciate how very rational you are being. I, too, run through my head what I would do if things got very bad for us. It gives me peace of mind to see that we could live on far less, if necessary. I hope it does the same for you. One thing I would remind you of is that if that catastrophic event were to happen, then another big change to have in mind would be that you could downgrade even more on your apartment. I know you have just done so, but it probably would be possible to find something less expensive, to move in with someone, or even to have someone move in with you (though I think your apartment now is small.)

I believe that thinking of these things while the likelihood seems very low actually gives you a mental strength. You could more likely keep calm and survive well if you've run it through your head like this.

**Radiance** · 03-11-2010, 07:02 AM

That is very true Joan, it also helps calculate how long would an EF fund last based in the different situations.
I am building my EF based on my CURRENT budget, but if the worse happens it would last even more.

**bjl584** · 03-11-2010, 07:15 AM

One comment and one question. What is the 322 for family support? Also, I would consider the 120 for medical a need even in the event of catastrophy.

**Radiance** · 03-11-2010, 07:27 AM

120 is not a health insurance payment. My son would be under his dad insurance if needed.
120 is moneys I allocate to buy natural remedies and to get natural treatments for me and my son. I hardly ever spend it all, I keep accumulating the left overs from month to month. I typically spend $60 per month.
I think under job loss, you need to pray to stay healthy and if anything does happen then make payment arrangements with a hospital... also my family doctor would see me or my son for free if it is very serious.

322, long story and culturally charged so open minded here....summary: parents are living overseas, disabled and no health insurance, no pension, no savings, I am their only income 322 cover their basic expenses. I am an only child.

**disneysteve** · 03-11-2010, 07:40 AM

I think this is a great exercise that everyone should do from time to time so I commend you for doing it.

One thing to keep in mind is that Want and Need sometimes get blended in the same budget item and I think that is where a lot of people get in trouble. For example, most of us need a car. It isn't a want. However, nobody needs a $30,000 shiny new car. A $5,000 used car will get you to and from work just fine. Another example is housing. We all need a place to live but nobody needs a $750,000 McMansion. So while a car is a need and a home is a need, many people have some degree of want wrapped up in that expense as well.

**bjl584** · 03-11-2010, 08:43 AM

Originally posted by Radiance View Post

120 is not a health insurance payment. My son would be under his dad insurance if needed.
120 is moneys I allocate to buy natural remedies and to get natural treatments for me and my son. I hardly ever spend it all, I keep accumulating the left overs from month to month. I typically spend $60 per month.
I think under job loss, you need to pray to stay healthy and if anything does happen then make payment arrangements with a hospital... also my family doctor would see me or my son for free if it is very serious.

322, long story and culturally charged so open minded here....summary: parents are living overseas, disabled and no health insurance, no pension, no savings, I am their only income 322 cover their basic expenses. I am an only child.

OK. I understand. I think that you are doing good. I'm sure that you can tweek some aspects of your budget as you have already stated, but you would have to live it to know specifically what to do. Hopefully you will never need to go on the hypothetical "bare bones catastophy" budget that you laid out, but you have a one up on most people. You have a plan. I think that's great.

**Radiance** · 03-11-2010, 09:13 AM

One thing to keep in mind is that Want and Need sometimes get blended in the same budget item and I think that is where a lot of people get in trouble. For example, most of us need a car. It isn't a want. However, nobody needs a $30,000 shiny new car. A $5,000 used car will get you to and from work just fine. Another example is housing. We all need a place to live but nobody needs a $750,000 McMansion. So while a car is a need and a home is a need, many people have some degree of want wrapped up in that expense as well.

I agree Steve, My next step is to start looking at all expenses, needs and wants and adjust on reasonable savings so the amounts are also correct for the three scenarios.

For now trying to get a hold of the item lines.
A friend says that if I loose my job I should take my son out of daycare, but if I did that, how can I look for a job and go to interviews?

Another says to stop paying my car if I loose my job..

I think all those considerations are too much.

My final destination is to have 1yr salary in the bank! If I go on my version of the emergency budget, that would last like 3 years!

**maat55** · 03-11-2010, 04:53 PM

Your different level of budgets is very wise. Everyone should have an emergency budget. Good job.

To add to Steve's post, it is useful to have a plan as for what % of your income you allow for housing and auto's. I base mine on DR's plan(no more than 50% of your yearly income towards all autos, jet skis etc. and no more than 25% of your take home pay towards housing).

Example: if you earn 100k and you have three vehicles, their combined worth should not add up to more than 50k all together. IMO, 40% if you are behind on retirement savings.

The idea is to limit how much of your income goes to things that go down in value.

**disneysteve** · 03-11-2010, 07:08 PM

Originally posted by maat55 View Post

Example: if you earn 100k and you have three vehicles, their combined worth should not add up to more than 50k all together.

You haven't met my cousin. He owns 3 cars that have a combined value of more than 100% of his income. Of course, one is a 1955 Pontiac and one is a 1960 Corvette. And neither is depreciating in value.

**frugalgirl** · 03-12-2010, 04:00 AM

I would include auto insurance as a need, and perhaps life and renter's insurance depending on your particular circumstances.

**disneysteve** · 03-12-2010, 05:12 AM

Originally posted by frugalgirl View Post

I would include auto insurance as a need, and perhaps life and renter's insurance depending on your particular circumstances.

There are different ways to define "need". The most basic definition is food, shelter, clothing and basic medical care - the things we need to live. In the grand scheme of things, everything else is a luxury. But in most people's minds, there are some other things that belong on the need list even though you could live without them. For example, I consider a telephone a need but I can tell you that a lot of my patients don't have telephone service so it obviously isn't truly a need. I consider a car a need but I know many people who don't own one, so again, not truly a necessity of life. Insurance is certainly good to have and, in the case of auto insurance, may be required by law if you own a vehicle, but I also know of plenty of people who choose to ignore that law and drive without coverage and take their chances in order to save money.

**wnlbutterfly** · 03-14-2010, 10:54 AM

If you lost your job you wouldn't NEED daycare right? And also the gas for the car would go down (other than going for interviews). Also if you were unemployed you would have some UI to help with some of that (not dipping as much into the EF).

It is a good idea to think these things through, to be prepared just in case.

Another post about WANTS and NEEDS