Trouble Comes In Three’s
Last Tuesday, Rosa and I planned to take our mini-van to the mechanic for some routine maintenance and to check out some strange noises. As we were preparing to leave, we made one last trip to the bathroom. That’s when our sewer line backed up. We abandoned our trip to the mechanic and called the plumber. Three hours and $ 134.oo later our sewer was running free of obstruction.
The next day, we took the mini-van to the mechanic. The routine maintenance and the diagnosis of our other concerns cost $148.00. A ventilation motor is the source of the noise coming from under the dashboard. It will cost approximately $100 to replace it once the part arrives.
In two days, we were hit with almost $400 in expenses over and above our normal monthly bills. And now it appears that I may have to undergo surgery to correct a hernia. Fortunately, we plan for these unpredictable expenses in advance by setting aside some money each month in anticipation of them. Consequently, we have the money to pay for them without resorting to debt, and the money won’t come from our emergency fund. It will come from our house maintenance and repair, automobile maintenance and repair, and our medical out-of-pocket and deductible budget categories.
The reality of unpredictable expenses
The point is that unpredictable expenses come at the worst of times and usually in three’s. Even if you don’t plan for unpredictable expenses, you can probably manage somehow to handle one without going into debt, provided it isn’t catastrophic. But can you handle two or three in quick succession? And can you handle an unpredictable expense that follows on the heels of a major expenditure, such as the purchase of a house, an automobile, a dream vacation, or even a major appliance? Probably not. But you know what? That’s exactly what happens in real life.
Why is it that your home air conditioner breaks down the day you return from the hospital after major surgery, or a hail storm destroys the roof on your house just days after you purchased new furniture? And then shortly after these events, there is a death in the family that requires you to purchase airline tickets on short notice so you can attend the funeral. I can’t explain it, but that is how it often happens.
How to plan ahead for unpredictable expenses
The best defense against unpredictable expenses is to acknowledge reality and plan for them in advance. You know that sooner or later you will have expenses for home repair and maintenance, automobile repair and maintenance, appliance repair and replacement, and medical co-pays and deductibles. You just don’t know when.
It’s easy to plan ahead. Create a budget item for each type of unpredictable expense. Set aside a sum every month in each category. To get an idea of how much to budget each month, go back at least a year, preferably three years or more, and add up all of your expenses for the budget categories in question. Divide the total by the number of years you went back to give you an average annual expenditure. Now divide that amount by twelve to determine a monthly amount. Accumulate the monthly allotments from month to month. Many months may pass before you have an expense, but when you have one, it will likely be large. You will need the accumulated cash to pay for it.
Planning for unpredictable expenses is really a form of short-term, targeted savings designed to keep you out of debt. It works. The money will be there when you need it, if you plan ahead.
K.C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages
