How To Avoid a Spending Relapse During a Crisis

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Photo courtesy of Paul Keleher

When things are running along pretty well it becomes easier and easier to settle into a routine of saving money, making frugal choices and avoiding new debts. However, if your life is like mine, just about the time you get settled something comes out of nowhere to completely derail your plan.  Earlier this year Murphy came to visit (you know Murphy, if it can happen it will).  We went through a few demoralizing weeks with problem after problem–things breaking around the house, people getting hurt, etc.

Then we were cruising along ready for a new school year for the kids when my Mom was diagnosed with a giant cerebral aneurysm (she has been hospitalized in ICU for the past 37 days following treatment).  Daily trips back and forth to the hospital have doubled our gas budget (the hospital is about 30 minutes from our home).  Our eating-out budget has gone up as we were often forced to grab something fast in between visiting hours.  The good news is we have made the budget adjustments and avoided taking on new debts, or withdrawing from our emergency fund.  Here’s how we are making it work:

  • Loosen up, but stick to core frugal principles. In a qualified crisis it seems a bit petty to be concerned with pinching pennies, so we have relaxed things a bit by lowering our debt snowball budget.  This allowed us to bump up a few categories that will undoubtedly increase while caring for my Mom.
  • Keep priorities in order.  Loosening up a bit does not mean you have a license to go on a shopping spree.  Many times this is the first reaction to crisis, particularly for reformed emotional shoppers such as myself.  No, buying things may make you feel better by creating a diversion in the short term, but when the bills settle and the “newness” of your purchase wears off, you will feel even more guilty over spending the money which adds to the depression you might already be experiencing.
  • Make budget adjustments as needed. My wife and I are normally reluctant to modify our monthly spending categories.  However, in an emergency a budget committee meeting may be in order.  Try to keep your overall budget amount the same by reducing non-essential categories to make room for essentials.  For instance, in our case food and gas increased almost immediately, so we reduced “Entertainment” and “Gifts” budget categories.  It won’t get us invited to many birthday parties, but you have to do what you have to do.
  • Be less aggressive with debt reduction and savings plans.  Like I mentioned above, we’ve scaled back a bit on our aggressive plans to pay off debt.  As much as I’d like to finish off our remaining balances, it just doesn’t make sense to stretch too far and have to turn right around and dip into our emergency fund, or even worse, borrow money from the credit card we are working so hard to pay off.
  • Get back on track as soon as possible.  In the early stages of an emergency you find yourself sort of going through the motions.  However, as things stabilize you will find yourself slowly returning to your normal routine.  When you recognize this is happening you can rebalance your budget categories and get back on track with your original goals.  Remember through all this that your family is your first priority–not Discover Card.  If it comes down to feeding your family and keeping the lights on, or paying your credit card payments, those other guys will just have to wait!

Comments

  1. I wrote about something kind of like that once. I compared a budget to driving with cruise control–sure sometimes you have to step on the gas or slow down in heavy traffic–when surprises come up. But the cool thing is if you have that cruise control all you need to do is ‘reset it’ or ‘restart it’ after the interruptions. Getting back on the budget is just like that. Sure sometimes we all have to go off–but what matters is we get back on. :)

  2. Hey Frugal Dad,

    I’m sorry to hear about your mom. I’ve recently started reading your blog and have really enjoyed it. May I ask a question about your budgeting method? What do you do if you go over budget in a particular category? Do you take the money from another category? Allow the overage to carry into the next month and just reduce your expenses for the following month? Take from your emergency fund? Find a way to bring in extra money to cover the expense? We do envelope budgeting, but a virtual version (not with real cash). So sometimes we’ll overspend in a particular category. Like if we’ve spent all of our gift money and then get invited to an unexpected birthday party. Or have a car repair that costs more than what’s in our car maintenance fund. Or I think I can make the grocery budget stretch to the end of the month, but there’s not quite enough, and I go over. I’m never really sure what the best course of action is to deal with this. If I just let the negative amount float into next month, we never seem to get caught up, because then we come up short the next month, and so on. Any tips?

    Thanks!
    Alissa

  3. @Alissa: Thanks for your comments–glad to have you as a new reader! We normally adjust other categories when we go over budget, and in some cases we have to move a little from our emergency fund to cover the overage. When we do this we lower the budgets for the next month just enough to put back the amount we took from the emergency fund.

  4. Hi Frugal Dad,

    I am a newcomer too and have been really enjoying reading your blog. Even though I live on the other side of the Globe in Australia :) I find that the things you write about are practical and can be applied in my life too. I have a question about budgets too. What percentage of our take home salary should we be aiming to save? Also is this percentage before or after we have contributed to an emergency fund? We have no debt other than our mortgage, have money saved for incoming bills etc. The difficulty that we are having is deciding how much we should be setting aside each month for an emergency fund and how much can/should go into straight savings. Also is there any point to plain old savings or should this be put into various saving categories like clothing/holidays/entertainment etc – the more discretionary type categories? Sorry for all the questions. Hope you can help us!

  5. @Kristen: First of all, thanks for being a reader and sharing your comments. I love the thought of “frugal family finances” spreading across the globe to Australia!

    Since you are debt free, establishing a solid emergency fund of roughly six months of expenses should be your next priority. No set rule on how much to divert to savings to hit this first savings goal, but we’ve tried to sock away about 15% of my take-home pay to build up our emergency fund. As for other spending categories, I like the idea of saving for things you know will happen regularly–Christmas, annual bills, etc. Breaking these annual expenses up into smaller chunks will make it easier to save throughout the year. Go ahead and start saving towards these recurring expenses while also building your emergency fund. Once the emergency fund is in place you can turn to more targeted savings funds for things like a new house, a new car, educational goals, etc.

    Thanks again for visiting Frugal Dad–let me know if you have any other questions I can address, and feel free to email me any time.

  6. 37 days in ICU is pretty serious and I hope that she is doing better. Do they have a point at which they will say that she is ok to move to a regular bed? Having heard what the costs are for one night in ICU, I can’t imagine the hospital bill after this one. I thank God quite often for the fact that I am quite healthy and don’t have to go to the doctor or hospital.

    I know it’s a small thing to pick out, but you state: “In a qualified crisis it seems a bit petty to be concerned with pinching pennies,…”
    For some reason when I hear things like this and to the effect of, “help those around you even if you need help yourself” I always am reminded of those flight safety speeches as done by the flight attendants. “If the oxygen masks deploy, make sure to fit your own mask first and then help those around you.” The first time I heard this, I thought it amazing that in this PC world of “give give give till it hurts” that there are some small islands of common sense. You cannot help others without making sure that you are at least somewhat ok first. Though others may call it selfish or petty, it is the best way to approach an emergency situation. They give the same advice in beach safety: only help other swimmers if you are either experienced at doing it or are a strong swimmer yourself. It is best for all involved if you don’t drown in debt trying to (financially) save someone else.

    I commend you FrugalDad for keeping an eye on your budget even during stressful times such as this. It is difficult but will be quite worth it when you finally come to the other side.

  7. @DavidK: They have a few guidelines to follow for allowing patients to return to “the floor,” but unfortunately my mom has failed to reach any of those milestones. And you’re right–the bills are astronomical!

  8. This makes me so grateful that I live in Canada, where we have universal health care coverage. As much as I sometimes complain about our high tax rate, hearing stories like these makes me realize that we pay those taxes for a reason. I hope your mother recovers quickly. Take care.

  9. It’s just a temporary slow down, or a speed bump in your budget planning. The priorities are being met, and you have adjusted accordingly.
    Budgets must always be flexible and changable and you seem to have that well under control :)

    It’s important that you know you are an emotional spender and that you are keeping that under control right now – good for you!

    Continued prayers for your Mom, her doctors, and your family as you work thru this. Remember to take some personal ‘time-out’ if possible, to recharge and rejuvenate your own batteries :)

    Very good and timely post! Hang in there!

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