Tuesday, 9 August 2016

The Oops-Fund Imperative

Nothing chills the heart faster than looking at your bank balance and seeing, realizing that there is nothing left.

You have less than five bucks to last you a little over a week and a half . . . and you have expenses still coming: gas, food, bus fare, etc.

This is a place that I have been many times in my life, and is certainly not a place that I want to go back to.

This is the reason for the “Oops-Fund”, the “Contingency Fund” or whatever you call it; that little pot of cash that you can dip into when you need to.

The trouble is that for most people, that “Oops-Fund” is our credit cards. This is what got me into my troubles and why I monitor their balances, interest rates and use them a sparingly as possible.

This is also why I devised and maintain my “Mid-Term Savings” account. This is my Oops-Fund. This is where I will dip into if I need to, in order to make it to the next payday.

To be honest I have a “Contingency Wallet” with a bit of cash in it, and this is where I will steal from if I need to. This is my first line of fiscal defence against budgetary irregularities and overspending.

You know, if I need some groceries but my Groceries Wallet is empty. Or even if I need that extra bottle of Propane and my Utilities Wallet is empty.

The trick with this wallet is that you, you know, have to put the cash back into that wallet the next payday . . . or that cash never gets back in there . . . and won’t be there the next time that you need it.

Again, the concept of the wallets with cash in them is to separate the spending that I do to operate and function with my bank account. Thereby reducing and controlling my spending.

The Mid-Term Savings comes into focus today because in two paydays, as in the one on Sept 7th, I will have $1500.00 in it and I will be able to do one of two things. I have been pondering these two choices lately.

I can either take a chunk of $500.00 out of that IOU to the Long-Term Savings account, or I could pay it all off and completely drain that Mid-Term Saving account.

The danger of doing this second option is that it would leave me without an Oops-Fund, and this is a dangerous place to be. 

If any sort of large, unforeseen and unavoidable expense were to come along, I would have to either have to dip into my Personal Overdraft or even further into my actual overdraft. 

Either that or claw back cash out of the Long-Term Savings or yes put it on a credit card. Again, depending on the size of the expense, I may still have to do that.

This is why I want to trickle save that Mid-Term Savings account up over time so as it will be able to absorb such fiscal shocks in the future.

So this is why I will do this $500.00 chunk bite out of my $1500.00 IOU (to myself) three times and hopefully complete it before the end of the year. All while keeping my Oops-Fund intact.

As always: Keep your head up, your attitude positive and keep moving forward!

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