Nobody can avoid the Expensive Month. You can be consistently hitting the same spending mark for half a year until it takes you by ambush. A car breaks down, an annual bill comes due, or something else requires repairs. Suddenly all your diligent savings seem to be for naught. It breaks up your rhythm, saps you of your frugal mojo. But I’m here to tell you that it’s going to be okay. The systems and habits you have in place to save and invest are a long term play and can overcome any expensive month. That being said, I was sitting bewildered on the couch last month as the unstoppable force of the Expensive Month crashed over me like a mighty wave.
A Convergence of Inconveniences
Coming out of April, I was riding on the crest of the wave. We just turned in a great month expenses wise (it was the first month post formula for the twins). On top of that, it was extra paycheck month for me so we got to save extra. Truly nothing could stop us now!
But then, I had to bring my car to the mechanic. It needed an oil change and it would be the perfect time to get the sketchy starter checked out. Just as I suspected, it needed to be replaced. As did the front axle, still the original one on my 2003 Accord. And the front brakes were shot. $1250 later, my car was good to go.
Next came the cell phone bill. We pay for a yearly plan through Mint and May just happened to be renewal month. The plan is quite reasonable, we only pay ~$32 per month for the two of us. At some point, the piper has to be paid and it had to be last month.
Finally, this was the month that the car insurance renewal had to happen. I got the sense that we were being ripped off by our now-former car insurance company so we decided to shop around. And I’m glad we did. We are literally saving $1000 for effectively the same coverage. Always shop around when it’s time to renew your car insurance! All of these things happened in the first week of May, which left us on the back foot for the rest of the month. The wave had crashed.
The Emergency Fund Buffer
This month is a textbook argument for an emergency fund. The mechanic bill was an immediate hit on our cash reserves. Having the emergency fund buffer didn’t make the expense hurt any less but it did remove any real stress from the situation. We ended up putting the other expenses on a rewards credit card and have already paid it off in full. This way we got some small benefit from the expenses and our emergency fund wasn’t hit with a three punch combo all at once. The habits of saving that we have cultivated made it possible to absorb these blows quite easily, even though it wasn’t fun!
A Break From Saving, But Not Investing
Another consequence of the extra big expenses is that we pulled back on our extra saving. We typically put a certain amount aside for our house fund, car fund, and travel fund every month. Last month we decided to keep those funds around to help replenish the emergency fund. It will take a little bit of time to get that bad Larry back to full capacity, but we’ll do so gradually.
Luckily, the Expensive Month was unable to stop us from our usual dollar cost averaging investment strategy. We didn’t change the frequency or amount of any of the contributions in our Roths or my TSP. Of course, Mr. Market had himself a terrible month (and year), so we won’t see immediate returns on these investments. That’s okay though, because we were able to buy shares at 20% off throughout our Expensive Month!
The Way Forward
Our previous preparations put us in a good position to get through the month. Now that it’s over, we can assess the damage and make a recovery plan. Overall, our emergency fund took a hit. But we took what would have been extra savings and spent it on the immediate expenses. This lessened the draw on our emergency fund. Just by sheer luck, this month is Marisa’s extra paycheck month. That will go a long way towards getting the emergency fund up to snuff.
Otherwise, everything is as normal. Our expenses this month are looking more like the months preceding the Expensive Month. Investment contributions haven’t changed (although performance is still quite down). And we’ll be looking to get back in the groove of the extra savings, especially for our house fund!
Sign Up for the Frugal Jon Journal!
