Yesterday, my baby’s daycare called me to say they hadn’t been paid for the entire month of February and if they didn’t get paid today, we would be out a daycare! () Some screw up with online bill pay meant that even though the money had left our account three weeks ago, they hadn’t seen the check.
A few years ago, I would have panicked, cried, liquidated everything and probably called our parents to borrow the cash we needed. Plus I would have been angry. Angry at the bank for their mistake, angry at the daycare that they didn’t call me earlier – it would have been the Blame Game all day long. Which really isn’t a fun game at all. *Jazz hands* It would have been DRAMA!
Following the Baby Steps has done an amazing thing though – not only were we able to just…. pay this extra daycare bill, we got to keep our emotional stability. Were we frustrated? Sure. But having to pony up $820 we weren’t planning on before the previous checks were canceled and refunded did not become an emergency for us.
This is because we have margin in our money. Having padding- an emergency fund – is magic. It turns emergencies into inconveniences. It’s magic – like bacon. But instead of using bacon to turn salads into entrees a la Jim Gaffigan, padding in your money turns emergencies into inconveniences… and then you can get on with your life (and bacon eating)!
How do we do this? We have looked at what bills, savings, tithes, and expenses we are going to need to plan for during the first week of the month. That’s the amount we keep “extra” in our bank account. That way if we don’t get paid when we thought we were going to or a bill comes early, we can cover it. We learned this after getting on the Dave Ramsey plan and struggling still to make rent. It was because rent is always due on the first, but we didn’t get our first paycheck sometimes until the 7th of the month – that’s officially late according to the Landlord, dangnabbit. That’s when we realized we can’t plan to pay for something today that we won’t earn until tomorrow – it sounds ridiculous but it took us a bit of time before this clicked. This February, we are earning March’s mortgage payment. Some people call this “aging your money.” And guess what – since we have done this, it has worked.
How much padding do you keep in your accounts? Are you budgeting for yesterday or are you budgeting for tomorrow? Would love to hear your feedback in the comments!