Your Money Monday | Dealing with Unexpected Expenses

Welcome to Your Money Monday. Your Money Monday is going to be a series of posts all about YOU and your MONEY! And, duh, I’ll post these on Mondays!

(If you follow me on IG, you may already know about YMM — I used to do little IG TV spots back when IG TV was a thing.)

Here’s the idea behind YMM: I want us to talk frankly and honestly about the subject of money because I firmly believe that EVERYONE (except for maybe the Jeff Bezoses of the world) have money stuff that they worry about.

And without a doubt, the one thing that makes these worries — no matter what they are — worse for every.single.one of us is shame.

Shame is what happens when we look around and think: We’re the only one struggling with this issue. We’re the only ones who can’t figure this stuff out.

As if the money stress itself wasn’t bad enough, now we’re thinking we’re alone in it.

Except, guess what? That’s 100% not true. I guarantee it.

By being open with you guys over the years about some of my own money struggles, I’ve become somewhat of a safe space for others to share their money struggles. It’s been my honor to hear from many readers over the years who are struggling.

While I don’t always have the perfect answer for them, I can offer a promise to each person who emails me and that is this: You are not alone. You are not the only one.

Your Money Monday is my attempt to light a match in the dark room of money stress. Only this room isn’t darkened by an absence of light, but rather by a curtain of shame. And the moment we talk about this stuff, we start to raise that curtain and dissipate the shame.

Today in YMM I want to address the topic of unexpected or unplanned for expenses. Think car repairs, dental visits, or even a letter from the school that you owe $100 for some upcoming field trip.

These kind of unanticipated expenses can throw any household into a spiral. But they are especially perilous if you are one of the millions of households living “month to month” — meaning your income is just enough or maybe even not quite enough to cover all your monthly expenses.

Side note: You can have a “low” income and live month to month, and you can have a “high” income and live month to month. If you make a “good income” but can’t seem to “get ahead”, it’s probably because you are living month to month. This is especially common in families that are carrying a good deal of debt (meaning student loans, car payments, personal loans, etc.).

One of the best things about budgeting for me is that it gives me really good insight into our money patterns. I’ve been able to see that what I thought were expenses coming from left field are actually, in many cases, quite predictable.

Take last week, for example. We brought in our car for its annual pre-test check-up (in Israel, you have to pass a car inspection each year before you can renew your registration).

Usually it’s just a matter of swapping out some filters and maybe popping on some new brake pads. But this year, the mechanic discovered that we had an oil leak which had been going on for a while apparently — and had done a number on the gear box and several other engine parts, too.

Oh, and the rear brakes needed to be replaced. And the timing belt.

The bill was high. I mean, seriously high. $2500 high. Gulp.

If this had happened to us ten years ago, we would have been in big trouble. We didn’t have $2500 to spend on car repairs. We barely had $250 to fill up the tank each month.

But thanks to budgeting for oh-so-many years, I’ve started to see the pattern: like it or not, car repairs are a reality of car ownership. (And rest assured: I do not like it. But at least they don’t catch me by surprise anymore.)

No, I don’t know when the big one is going to come. Or how much it’s going to be. But I do know: You own a car, you pay the piper.

So instead of enter-panic-mode or max-out-credit-card — my two previous go-to-moves for dealing with unexpected expenses — I now set aside $150 each month to deal with car maintenance & repairs.

It’s like an emergency fund, but for my car. I call these pre-emptive set-asides my sink funds, and they help us to pay for all sorts of previously unexpected expenses.

(And another YMM tip: When the amount in my sink fund isn’t enough to cover the whole $2500 — because that’s a lot of money! — I tap our actual emergency fund to make up the difference.)

Not only do my sink funds help me to pay the bills, they also keep me from spiraling from a dispiriting trip to the mechanic into a major financial crisis.

Do I relish having to spend $2500 on car repairs? No, I do not.

I’d much rather have saved that $2500. Or gone on vacation with it. Or, I don’t know, bought groceries. But thankfully I no longer have to borrow from our future vacations, or our grocery budget, or my dad (all of which I’ve done in the past!) to pay that car repair bill. Because now we “sink” those funds in advance.

If you find yourself struggling with unexpected expenses, I want you to know two things:

(1) You’re not alone. It’s not just me with the car bill. I am certain that at least 9 out of 10 people reading this post have had an “unexpected expense” of their own this month!

(2) The best solution — practically and emotionally — that I’ve found to deal with these types of expenses is to start by identifying your money patterns and then set aside enough cash to deal with them when they happen again in the future.

If you’re not sure where or how to get started, ask yourself:

• What expense did I have this month that was unexpected?
• How often does this type of expense pop up?
• What’s a reasonable amount of money that I might need to cover it the next time it pops up?
• How much do I need to set aside — aka “sink” — each month so that I’ll have enough to cover it the next time?

We can’t control all the variables. Even the best budgeter will be caught off guard on occasion. But by observing your money patterns and taking preemptive steps to deal with them, unexpected expenses will be fewer and further between.

Which hopefully means that you will be able to prevent those downward spirals.

Got a YMM question? Want to chat about money? I’m here! Comment or shoot me an email!