My last day of full-time work was Friday February 5, 2016. My manager needed to have me turn over the computer and other equipment so I was able to leave a little early. Yay!
We both wanted to have at least three months’ worth of emergency savings (roughly $12,000) as well as $5,000 for future expenses when I quit but that didn’t happen.
Problems just kept happening where we were so stressed that we just threw money at each situation instead of taking the time to solve the problem. If we both had been at peace then we wouldn’t have spent money to fix these issues. And if any problem did need money for resolution, we wouldn’t have spent nearly what we ended up spending. The end result is that we kept blowing money from stress, which kept pushing back my exit date, which just added to the stress. It was an endless cycle. Being stressed, I couldn’t think of a way out of the cycle and also leave with a total of $17k in savings. So I decided to just quit. Things have a habit of just working themselves out.
Problems just kept happening where we were so stressed that we just threw money at each situation instead of taking the time to solve the problem. If we both had been at peace then we wouldn’t have spent money to fix these issues. And if any problem did need money for resolution, we wouldn’t have spent nearly what we ended up spending. The end result is that we kept blowing money from stress, which kept pushing back my exit date, which just added to the stress. It was an endless cycle. Being stressed, I couldn’t think of a way out of the cycle and also leave with a total of $17k in savings. So I decided to just quit. Things have a habit of just working themselves out.
That being said, it’s really not a bright idea to leave work with just $2k in savings as there will always be bumps in the road. Here are some things we are keeping in mind.
Mr. NaD is a teacher. His job is pretty secure.
I’m building my side gig income. It’s not a lot at the moment, which isn’t really helping to ease the trepidation of not having a lot of savings. I’m going to have faith that my income will grow in time for the next calamity.
When I quit, I had 9 weeks or so of vacation on the table. Instead of giving me a lump sum check for unused vacation time, my employer is allowing me to take all 9 weeks as regular paychecks so that I can have insurance through the end of April. When my vacation pay stops coming in, we will have $3000 saved for future medical expenses, $1500 for future car expenses, and $500 for future house issues we will encounter. This totals $5k and does include the $2k from the sale of my commuter car. The remainder of the vacation money will go to cash flow Mr. NaD's Master's degree.
Technically speaking I do have $1800 set aside for future fun activities like flying my dad (Grandpa NaD) in. He's only met NaD Jr. twice in 4 years and doesn't make enough money to have internet so we don't face time. This $1800 also includes things like national and state park fees and swimming and gymnastic lessons. We also have $3k put aside for this summer's RV trip to TN and $6k set aside for the following summer's trip to see Grandpa NaD and Disney Land. So although these are future expenses we could forgo them if we absolutely had to in an emergency. Having a stable income, a $5k slush fund, and a small amount of side gig money coming in make me feel more at ease leaving full-time work.
Emergency Fund vs. Unexpected Future Expenses
We have two ten-year-old cars. There will be unexpected repairs. There will be house expenses and I’m sure we will have medical expenses as well. These, to me, are not emergencies. They are future expenses that need to be planned for even though I don't know what these expenses will be. An emergency fund is for unforeseen occurrences. And yes, future unforeseen car expenses could be interpreted as unexpected but you kind of have to expect future repair issues on ten-year-old cars. If it came down to it, the emergency fund could double as a slush fund for car, house, and medical issues and vice versa. I guess in a sense I do have a little over a months’ worth of emergency savings, but I don’t tend to think of it that way.
Another example of a future expense vs. an emergency is a cold vs. a broken arm. I expect someone in the family to get a cold and need Nyquil or Children's Tylenol. That sort of thing happens and should be treated as a future expense. A broken arm would be an emergency. The dog chewing the porch's trim is a future expense as he's always chewing something on the house but the wind knocking down the fence would be funds I would pull from the emergency fund. One of us will get a cavity every few years or so. That's what I consider to be a future expense. My cousin fell off her bike and busted her jaw and lost a few teeth. That I would consider to be an emergency.
Technically speaking I do have $1800 set aside for future fun activities like flying my dad (Grandpa NaD) in. He's only met NaD Jr. twice in 4 years and doesn't make enough money to have internet so we don't face time. This $1800 also includes things like national and state park fees and swimming and gymnastic lessons. We also have $3k put aside for this summer's RV trip to TN and $6k set aside for the following summer's trip to see Grandpa NaD and Disney Land. So although these are future expenses we could forgo them if we absolutely had to in an emergency. Having a stable income, a $5k slush fund, and a small amount of side gig money coming in make me feel more at ease leaving full-time work.
Emergency Fund vs. Unexpected Future Expenses
We have two ten-year-old cars. There will be unexpected repairs. There will be house expenses and I’m sure we will have medical expenses as well. These, to me, are not emergencies. They are future expenses that need to be planned for even though I don't know what these expenses will be. An emergency fund is for unforeseen occurrences. And yes, future unforeseen car expenses could be interpreted as unexpected but you kind of have to expect future repair issues on ten-year-old cars. If it came down to it, the emergency fund could double as a slush fund for car, house, and medical issues and vice versa. I guess in a sense I do have a little over a months’ worth of emergency savings, but I don’t tend to think of it that way.
Another example of a future expense vs. an emergency is a cold vs. a broken arm. I expect someone in the family to get a cold and need Nyquil or Children's Tylenol. That sort of thing happens and should be treated as a future expense. A broken arm would be an emergency. The dog chewing the porch's trim is a future expense as he's always chewing something on the house but the wind knocking down the fence would be funds I would pull from the emergency fund. One of us will get a cavity every few years or so. That's what I consider to be a future expense. My cousin fell off her bike and busted her jaw and lost a few teeth. That I would consider to be an emergency.
To balance out a possible shortage based on the rate of return I’m using, the chart also uses the earliest year possible. For example, NaD Jr. may not have enough for the car he wants until age 18, instead of age 16 as accounted for in the chart. He also my not save the full $6k. So there may be more time to have the funds grow. I also rounded down.
If we have to add to the fund a little over the years, that won’t be unexpected, but $8k up front plus a little over the years (if necessary) is still a lot better than $21k out of pocket down the road.
now
|
year needed
|
at age
|
final amount
|
Germination
| ||
1
|
car
|
$2,500
|
2027
|
16
|
$6,000
|
11.5
|
2
|
honeymoon
|
$1,800
|
2029
|
18
|
$5,000
|
13.5
|
3
|
wedding
|
$3,700
|
2029
|
18
|
$10,000
|
13.5
|
Let’s start with Line 1. When it is time for NaD Jr. to buy a car, we will match NaD Jr.’s savings dollar for dollar up to $6k in today’s dollars. This will give him $12k. After subtracting out tax, title, and license, that's still a pretty good car for a teenager. Under the Now column, $2500 is allotted for our portion of NaD Jr.’s car. It will take 11.5 years to turn $2500 into $6000. Under the Year column it shows 2027, which is the year he will turn 16.
If he does get married at 18 in 2029, we will have $10k for many things. I don’t necessarily believe we need to spend $10k on the wedding itself. But there are many things at the time of the wedding besides the cost of the wedding that incur money. If tradition holds true, as parents of the groom we will host the rehearsal dinner. That may cost a bit. While it’s traditional for the bride’s parents to pay for the wedding, if it’s a simple wedding, I don’t mind helping out so that each set of parents spends the same. In other words, if the wedding is $8k and the rehearsal dinner is $2k, I don’t mind paying for half of all of the festivities at $5k. That seems reasonable to me. However, if the bride wants to spend $30k, they’re on their own.
My dad would not be able to afford to come if we don’t buy his plane ticket. So that will be about $800 to $1000.
Yes, we are spending money on the rehearsal dinner and other things, but I still want to give a nice gift as well. Maybe a decent mattress, or something of equal value. Mr. NaD’s mother gave us a fridge and my dad gave us a check for $1000.
There will also be the added expense of increased groceries for the week while people are in town and staying with us. I’m sure we’ll also go out to eat a time or two with our guests and we’ll also do some sightseeing.
Clothing
We will want to buy something new to wear to the wedding and rehearsal dinner.
Clothing
We will want to buy something new to wear to the wedding and rehearsal dinner.
Mr. NaD and I may need a weekend away at a resort to relax from all the nonsense a wedding entails.
What if the stock market takes a dip right before he announces his engagement? What if it doesn’t return 8% after inflation and management fees? To make up for a shortage at the time we purchase the car or a shortage for the honeymoon, we can take funds from here.
I’m sure there are other little things that I'm not considering. By having a huge
"Wedding" budget I will not be stressed at a time I should be celebrating.
What to tell the kids?
NaD Jr. and his bride will know we are giving them $5k for their honeymoon. He will know that the most we will match is $6k on his car. He will not know the exact amount we have to spend in the Wedding category. We will only tell him his budget for the rehearsal dinner and the wedding if the wedding is simple and we'll be contributing to both. That way they'll know their budget for the wedding.
I don’t necessarily feel I need to spend all $10k allotted for in the wedding category, but it’s there if we need it. I think the main factor for me is that I will be able to rest easy knowing the above expenses are not something we will have to put much further money into.
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