A couple of years ago I was on vacation with my family in Colorado. We were driving down I-25 from Rocky Mountain National Park to Denver where I had made hotel reservations for the night. It had rained pretty heavily that day, which had somewhat spoiled our plans for sightseeing.
As we were heading down I-25, I noticed one of the traffic information signs indicated that I-25 was closed just a few miles ahead due to standing water. I was thinking, “Great, now what do we do.” We were in an unfamiliar area and had to figure out how to get to where we wanted to go without using the main highway to get there.
Fortunately, my wife was with me and was able to use the GPS on my phone to find other alternatives. With a little stumbling around we did eventually make it to our hotel, but it made for a bit more stress than I had planned that evening.
Contrast that with this past summer. One of the main roads I travel each day on my commute was closed for a couple months as they did some major reconstruction work. But I knew a couple of back roads I could take to get around it. I also knew the “official” detour very well. Inconvenient? Sure. But it wasn’t particularly stressful because I was very familiar with the area. In fact, it was almost enjoyable to take some routes other than the same commute I follow every day.
So what is the point?
Sometimes we hit detours in our financial life. Things seem to be going ok, then we get a call from the school that little Johnny fell on the playground and broke his arm and we know that means a bunch of unanticipated medical bills. Or perhaps we find a puddle of water in our basement around the water heater and groan with the thoughts of the bill we will see from the plumber.
Sometimes the detours can be major. The boss tells us our services are no longer needed. The doctor says it’s cancer. We get a call to come home quick because our home is on fire.
Detours are a reality. What do you do when those detours hit?
Handling financial detours
There are several things that will make those detours a little easier to bear.
Have an emergency fund
The first and most important key is to have an emergency fund.
I am not a fortune teller, but I guarantee that at some point this year you’ll hit some unexpected speed bumps. I don’t know what is going to happen. I don’t know when it will happen. Maybe they will be small (hopefully) or maybe they will be big. But those speed bumps are just a part of life.
Last, year just before the Christmas holidays, we had an issue with our van that cost about a thousand dollars to fix. A few days later we had a plumbing issue that also cost several hundred dollars to fix. Not exactly expenses we had hoped for in the midst of the holiday. But fortunately we have an emergency fund with several months of expenses so we could just write a check and pay for what needed done.
Had that happened before we had the emergency fund in place I’d have been wondering why me and it would have all been put on credit cards. Then I would have been wondering why I couldn’t ever quite seem to get ahead.
Detours are not a surprise. We don’t know what they will be. We don’t know when. But they are a guarantee of life.
Have a budget
While a budget may not solve our problems, there is a sense of comfort and power that comes from knowing what is coming in and what is going out.
I wasn’t happy when I saw that sign saying I-25 was closed, but having the GPS on my phone was a huge help. I didn’t know for sure how we were were going to get where we needed to go, but at least I had a map to help me find my way.
A budget is very much like that. When we hit a financial detour, we may not know for sure exactly how we are going to get around it. But if we have a budget then we have a plan that we can adjust to get back to where we need to be.
Always have margin
Margin simply means you spend less than you make. When we have every dollar committed before it is even earned then we have no ability to weather those financial storms.
When that road was closed on my commute, I wasn’t concerned about how I would get to work. I knew the ways around the construction. What I did have to do is leave a few minutes earlier for work. The detours were going to take me a little longer. If I left at the same time, I would have been stressed about getting to work on time, but leaving myself a little margin meant I could enjoy the change of scenery along the way.
Margin takes the stress out of our lives. When we aren’t over committed, those detours become just speed bumps instead of road blocks.
Navigating the detours
Financial detours should not be a surprise. Part of life on this planet includes the fact that sometimes Murphy shows up. Things break. Accidents happen. Plans don’t quite work out like we thought. Life happens.
If we have prepared ahead of time, those detours are manageable. In fact sometimes they take us down a road that we haven’t traveled before. By having a plan, we can enjoy the ride. Sometimes we learn valuable lessons on those detours. And sometimes those detours actually lead us to a better place.
How do you respond when life happens and you have unexpected expenses?
Photo credit: Laura (creative commons)