During a morning walk on a clear, sunny day in late October, we got the call. The kind of call that makes you drop everything and jump on the next plane across the country no matter what it costs.
Within a few hours, I’d already dropped thousands of dollars on last minute flights, a rental car, and quarantine-friendly accommodations. Bad became worse, and before we knew it, we had plans to stay on the other side of the country for several months away from our home and the lives we’d built.
Amazingly, during that time we weren’t concerned about the added costs and the financial implications of being away from home. We’d made a few key money moves before leaving that saved us from feeling financial stress and allowed us to focus on family.
1. My Finances Are Automated
Because remembering to pay routine bills is the LAST thing you need to worry about when you’re handling an emergency.
Here’s a quick list of all of the bills/contributions that I never had to think about while traveling:
- Mortgage payments
- Homeowner’s insurance
- Car insurance
- Health insurance
- Credit card payments
- Cell phone bill
- Utilities (electricity, water, trash, sewage, etc.)
- Spotify (our only subscription)
- Retirement contributions
Instead of manually paying bills every month, I save time and effort by automating all of my transactions. I also avoid the risk of incurring late fees because I forgot to pay while I was dealing with an emergency. I track all of my accounts through Personal Capital, so I just log on regularly and confirm everything is in order and there’s no spending I don’t recognize. All this to say, I barely even had to think about day to day transactions while I was away.
2. My Emergency Fund Can Float Me for Over a Year
When all else fails, your emergency fund is there to save the day!
To prepare for Mr. H’s anticipated and my unanticipated year long sabbaticals from full-time work in 2019, we bumped up our emergency fund to cover one year’s worth of regular expenses (even longer when combined with our passive income). We had quickly topped this fund off again after both going back to work this past Summer. So, when we saw the price tags, we didn’t even flinch. We already had more than enough earmarked for this.
There is something incredibly relieving about knowing you have enough cash to do what you need to do during an emergency. Having that kind of power turned an event that might have caused a financial panic attack a few years ago into just a small financial annoyance today. The impact on my stress level of that kind of financial privilege and preparation cannot be overstated.
3. My Fixed Expenses Are Already Low
Because our regular budget is only a fraction of our monthly income, we can still make ends meet without breaking a sweat. Even when the $hit hits the fan.
During “normal” times, I’m usually on the lookout for opportunities to reduce our annual expenses even further. In the couple months before leaving town, we’d changed internet providers, which got us higher speeds and saved us $308.64 annually. I also took advantage of the historically low mortgage rates and refinanced our mortgage from an interest rate of 4.25% down to 2.5%. That alone freed up $4,537.56 in our annual budget. Routinely making moves like this means that, without depriving yourself, when an emergency happens and you suddenly need to find more money in the budget, it’s already there waiting for you.
By following these three guiding principles, I was financially prepared during a worst case scenario event. I was able to be where I needed to be, and do what I needed to do without being held back by my lifestyle or money management skills. Instead, those were the very things that helped me the most.