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Wednesday, April 16, 2008

Deobligating Emergency Funds

In the past month or so, my budget has been an additional source of stress that I really didn't need. I was over budget in a number of categories, while still trying to work on that YNAB concept of living on last month's income. Things were clearly not going well.

I had also realized that while my work wardrobe was great for the winter, my sweaters were not going to cut it for the summer months and I had to spend some money on some shirts for work. And in another 50 miles or so, I would need a new pair of running shoes.

So I had all that occurring on one Excel spreadsheet. But over here, on another Excel spreadsheet, was the account that I had designated my emergency fund. It very easily had 10 months of normal expenses in it - not just the expenses I would have if I lost my job and needed the emergency fund for 10 months. And this isn't including my normal savings account - this is just the emergency account.

After a stressful day at work, I came home to find the budget spreadsheet open on my computer. And I made a decision. I took $1000 out of my emergency fund account, transferred it to my day to day account, and reworked the budget.

And it was like a weight had been lifted. I was no longer overbudget in a bunch of categories, and I can "splurge" on the $10 charity event on Friday. I can go to the store and buy a few nice, yet inexpensive items to wear to work. I can finally buy the frame for my bar association certificate.

Do I plan to spend all the money this month? Absolutely not. But it's the padding I needed to get me through the expenses flying at me from all directions. Will everyone agree with this tactic? Probably not. But for me, I think it was the right decision. If nothing else, I feel better about my financial situation, and that's what's important.

Plus I won't have to wear sweaters to work in July. Always a good thing.

2 comments:

Tom said...

I think you did well. You bought things you needed. There is absolutely nothing wrong with the frame and the stress relief alone is probably worth it IMO. : )

J. Savings said...

And you know what? you're now on the right track, both emotionally and money-ly! haha...

Losing that stress is key, congrats!