When sticking to a budget there are certainly going to be “unknowns”. These hidden financial landmines in your path to debt-free living may blow your budget out of proportion. How do you deal with a car breaking down, a sick child, or a large necessary purchase?
As many of you know, I’m trying desperately to budget and pay down medical bills in the hopes of buying a home (one of these days). My future depends on today’s purchases and careful spending.
No matter what your situation is, you will have unforeseen emergencies. If you’re fortunate enough to have cash on hand to cover these areas, I salute you. However, according to financial research, there are more people in my situation with limited savings, than those with large slush funds currently.
For people like me, who bank a small portion a week, emergency purchases can literally undo months of careful savings in one event.
This week, I have my own “emergency purchase”. My daughter has a cavity on a back molar that involves moving her braces and removing a tooth. In the end, it’s a good thing for her because it will mean the chance her wisdom teeth will have enough room to come in now. But it will result in combined fees of a general dentist and our orthodontist.
Incidentally, after years of paying the orthodontist’s bill of 5K, I’m down to my last $700.00 owing to his practice. I was nearly celebrating the fact that I would soon be depleting another bill and was poised to begin “snowballing” that money to other creditors at the hospital. Creditors, I promised larger payments to in the near future, and doubtless will have to push those dates back, once again.
I did what generations of women have long done when faced with an emergency- I cried.
Immediately after that I enacted my own emergency action plan. Even though the kids have insurance, through their dad- it’s limited. No orthodontist visits are covered, and nearly two-thirds of the bill will be mine from the dentist. Best estimate? About another $1,000.00 by the time you include the orthodontist and the dentist. Ugh.
It came out better than I thought, though, because I’ve learned two things in this long life of fiscal drama of mine. One is the power of negotiation and the second is to face your issues squarely.
In the past, I have to admit I wasn’t so tenacious with hunting down negotiations, or so quick to jump on a pending financial situation before it turned into a nightmare. I might have drained my savings account to pay the debt off and then in another month had no resources for yet another emergency.
Instead I worked a new payment plan out immediately with the creditors at the hospital, threw a small deposit down for the new dental work, obtained a quick dental discount card to give me some reduction, and worked a new payment plan out with the orthodontist. All my creditors are reasonably happy and I’m saved from nasty collection issues. It was a day on the phone negotiating this, but it was worth it.
Here’s what you can take with you: Especially with limited resources, it’s vital to work on negotiations with creditors. You can still stick most of the time to some semblance of your budget. Don’t drain the savings account unless it’s a last, terrible resort.