That's a boy scout motto, isn't it? Always be prepared.
In 2008, right as the stock market was beginning it's decline and banks seemed to be going under on a regular basis, we were in the middle of having some major work done on our kitchen. We had saved for this work for many years. That savings, although earmarked for the kitchen remodel, was our cushion against any unforeseen circumstances. I always felt we were financially safe. Our mortgage was about to be paid off that year as well. We were secure.
Then it hit me. We were spending that savings on the kitchen work. Our safety net was slipping through our hands. We still had investments. But with the downturn in the markets at that time, selling stocks would not be a good move. That was when the thought occurred to us to build some new savings cushions, 2 in fact. One for medical emergencies. And the other for any other emergency that could come up (like the engine in the car just drops out the bottom, or some other such financial surprise). The medical emergency fund amount was based on how much our out-of-pocket for 1 year could possibly amount to, with our then current insurance. Having spent just 1 day in the ER a few years before, I knew how quickly medical expenses could add up. So the medical emergency fund was the priority. I reworked our budget to allow for hefty contributions to that budget item.
The other fund has grown more slowly. I add a little bit every month, even if it's just a couple of dollars. Over the years, that has grown to over $1000. All of that money is still there, untouched. Even now, with our current financial changes, I don't feel it's time to use that money. I feel there could be even greater challenges, as a possibility.
Several months ago, call it intuition or God's guidance, I felt compelled to cut our spending further, and bank more of my husbands income. So, basically for this year, we have been living on a good deal less than our income. As I draw up each month's budget, I simply don't allocate all of the income from the previous month's paychecks. I carry forward some of this income, in a "Surplus" category. While the total right now is not huge, it is something. We have surplussed about $3500 since the first of the year, Some of this is due to extra hours my husband was able to pick up, and the rest just living below our means.
I guess you could say that I'm a compulsive saver. I have always saved a little bit, no matter how small my income was. Some folks like to live right up to the edge. They are comfortable spending every last penny they earn. Other folks like to live well beyond the edge. They are actually comfortable accruing debt month after month. (You can tell by my use of words that this baffles me.) And then there are those of us who feel most comfortable when they are accruing a surplus month after month. I fall into the latter category. It's my comfort zone.
When some people see a surplus, they immediately think "whoopee! Here comes that dream vacation, new car, sailboat, etc." I know that for our family, we are better off just being prepared for the unforeseen.
I suspect that I am a more extreme saver than my husband. Although, at this point, I think he can see the benefits to my compulsive saving nature. In the next several months, we'll still try to maintain that surplus, as long as possible. We'll be growing our income and cutting our expenses, and likely dip into the surplus in the tighter months, so that we can stay on track for retirement and our kids' university expenses. Simply put, our bigger goals outweigh fleeting pleasures.
