Dealing With Unexpected Expenses (Hint: You NEED an emergency fund)

FF_Tires$714.20! That’s how much new tires cost on my wife’s vehicle yesterday. Not too long ago we would have had to put the tires on the credit card and pay them off over time…a few years time. By then the tires would have cost over $800 when you add credit card interest.

Fortunately, we now have plenty of money set aside in a bank account for just such an occasion. No panic. No worries. Just a “What a bummer” and on with the day. We do still charge the expense on the credit card (don’t want to miss out on Discover Card’s cash back). The difference is we pay our card off in full every month so there’s never any interest.

The thing about unexpected expenses is…you kind of have to expect them. Maybe unplanned is a better word. Life is unpredictable. When it comes to a house, car, pets, kids or health—things break. And then they need repaired or replaced. And either solution costs money. Having a cushion of cash won’t protect you from everything life throws at you, but it does allow you more options.

A little trivia:

Talking about credit cards and automobiles got me all nostalgic. Becky and I bought our first car as a married couple on a credit card. We didn’t have any money saved up(in fact we were deep in debt as we worked our way through college). But we received one of those credit card offers for one year at 1.9% or something like that. The card had a limit of $5,000. When our only car(my first) broke down for good, our friends drove us to the Honda dealer and we picked out a car that we liked—and that was in the ballpark of our limit. The sales manager had to squeeze the card pretty tight to get the whole car plus taxes onto that card. And off we went…$5,000 deeper in debt with a used Honda Accord to get us to classes and jobs.

So glad we don’t have to squeeze purchases on to a credit card any more. After a lot of work and MANY lessons learned the hard way, we have a pile of money in the bank that we can use to cover the unexpected bills and also take advantage of unexpected opportunities (like the 2008-2009 stock market—but that’s another story).

One of the biggest money mistakes people make is not building an emergency fund. If you don’t have one, start today…buy a frozen pizza instead of takeout and put the $10 difference in a separate savings account. You’ll begin to taste financial freedom immediately.

Alternative Education

Education of a Wandering ManMy brother Seth recommended a book to me recently, which I then read and thoroughly enjoyed. The book was Education of a Wandering Man by the author of so many great Western books, Louis L’Amour.

Throughout Education of a Wandering Man, L’Amour tells stories of his “education” and how he came to be such a good writer. His qualifications didn’t include a college degree or even a high school diploma. Education doesn’t only come from school. In fact, many things are best learned outside of school.

L’Amour dropped out of school at 15 years of age and traveled the world. He picked up any odd jobs he could to earn money along the way—not an easy thing in the 1920’s and 30’s. Since he was able and willing he found work as a ranch hand, miner, sailor and sometimes amateur boxer. He traveled extensively in the western part of the United States as well as overseas. He often asked locals about the history of the area wherever he was. He listened to the gunfighters, lawmen and cowboys who had lived the stories of the Old West firsthand. He explored the towns, mountains and country sides of those old stories. This level of immersion into history and geography helped him write incredible, page-turning novels later in his life. L’Amour said, “No matter where you go, east, west, north, and south, there are stories. People are forever asking me where I get my ideas, but one has only to look, and to live with awareness. All men look, but so few can see.”

Another way L’Amour continued his education was reading. He had books with him wherever he went. He frequented libraries and also spent some of whatever money he earned along the way to buy books. He often read over 100 books per year. By the time he wrote Education of a Wandering Man he had amassed a personal library of over 10,000 of his favorite books. Of course he also wrote 86 novels, 16 short story collections and 3 nonfiction books of his own! Not bad for a high school dropout.

Here are a few more Louis L’Amour quotes to think about this week:

  • “A book is less important for what it says than for what it makes you think.”
  • “One becomes a writer by writing.”
  • “I do not believe the human mind has any limits but those we impose ourselves.”

As you probably know by now, I’m a huge advocate of books, lifelong learning and self-education. I partially credit Louis L’Amour books for my love of reading. I read many of his novels in high school. I also read the Narnia books, Hardy boys, Nancy Drew and a smattering of non-fiction. Any kind of books are useful to get a person into the habit. I now read a ton of non-fiction(18 books so far this year). I’d like to tell you that I gained my financial freedom by reading books. But sadly, I dragged my wife through many lessons the hard way. Don’t follow my path, follow my advice. Read the books. There are MUCH easier ways to financial freedom than the challenges I took on. As L’Amour says of learning the hard way, “I believe adventure is nothing but a romantic name for trouble.”

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