I’ve mentioned CD ladders as good options for tax refunds and emergency funds. They’re a safe way to earn a bit more in interest than the basic savings account. Currently, you won’t earn significantly more, but in the past I’ve seen CD rates go as high as 7% on a 5-year CD.

What is a CD Ladder?
Basically a CD ladder is five CDs, each with different maturity dates. Traditionally, the maturity dates are 1, 2, 3, 4, and 5 years. You buy them all at the same time. Then, when the 1-year CD matures, you roll it over into a new 5-year CD. After 5 years, you’ll have 5 CDs with the highest possible rate at the time of purchase, and you’ll always have a CD maturing within the next 12 months in case you need the funds.

Where Can I Create a CD Ladder?
Most banks offer CDs, so choose any bank or credit union. It’s best to get them all from the same bank or credit union to avoid future confusion. Before choosing a bank, read the reviews to make sure they don’t have issues with properly informing you about CD maturity. If you don’t notify them of your intention within the designated time period after maturity, they’ll automatically renew it into a CD with the same term.

Potential CD Ladder Earnings
Here’s an example of the interest you could earn with a CD ladder vs. a traditional savings account. We’ll start with $1,000 CDs. You may need more than this to open a CD at some banks, but it’s a nice round number for calculations. If you have a significant amount of money to invest, you can buy jumbo CDs, which have higher interest rates. These are Everbank rates. Even though I no longer love the bank, they have all the rates on their website, and they’re pretty generous.

1-year CD – $1,000 – 1.39%
2-year CD – $1,000 – 1.85%
3-year CD – $1,000 – 2.27%
4-year CD – $1,000 – 2.78%
5-year CD – $1,000 – 3.30%

After 5 years, you’ll have earned $768.40 in interest vs. $360 from a standard savings account. Of course, this assumes that interest rates won’t rise in the next five years. They will, because they move with the Fed rate, but CD rates will also rise with the Fed rate, so you’re renewed 5-year CD will earn substantially more than a savings account.

Of course, the more you can start with, the more you’ll earn. If you’re just starting, shoot for $10,000 total. Then, as each CD matures, consider adding more funds to each CD until eventually you have $25,000 in a CD ladder. The money is safe, it can be used for emergencies, and it’s earning a decent return.

Last Friday, NPR’s Marketplace had an interesting report on the true cost of all our modern necessities. Taken individually, we don’t really think about what all these things cost us, but taken together they add up to quite a bit of our budget. So, how did we get here and do we really need to be here?

Life in a Simpler Time
People like to hearken back to a simpler age, the 1960s, when talking about how a family could afford to live on one income, and yet they puzzle over the fact that a TV or refrigerator cost ten times more (when inflation is factored in). How could these families flourish on less income and still buy these things?

It’s simple – they didn’t buy as much stuff, and they didn’t have as many supporting expenses for that stuff. Back then a TV cost $300-$500 (more if you wanted color), which was a much larger chunk of the average $5500 income than a modern $300 TV. But, they only had one TV. And they didn’t have cable. So, they paid for the TV and the electricity to power it, and that was it. Since there were only a few channels, they didn’t watch as much of it, either.

Where the Money Goes Today
Household Incomes are ten times higher than the 1960s (although really, they’re only double when adjusted for inflation), yet TVs cost about the same as they did back then. The difference now, is that most families have two or three of them, plus cable, a DVR or two, and DVD player or two. Then you need stuff to watch on that, so add on a movie subscription, too.

Or, let’s look at telephones. Again, most families only had one. It had a cord and they probably rented it from the phone company. Long distance was expensive, so they didn’t make many of those calls. I can’t find an exact cost for the average phone bill, but let’s just go with “less than now.”

Flash forward to today. In addition to a home phone (if you have one), there are cell phones for every member of the family. Some of those have data or texting plans.

Of course, you also need to add in internet access and computers with which to access them.

Want music? Well, then, you’ll need an MP3 player and maybe a CD player.

What My Family Spends on New Necessities
Just as a real life example, here’s what my husband and I spend on our “necessities” for one month:

$88.40 for cable with DVR (one TV, one Premium channel, one upper tier package)
$66.33 for home phone and internet bundle (no long distance or other frills)
$95 for two cell phones (no data or texting plans)
$9.99 for Real Rhapsody (music)
$19.99 for Blockbuster Total Access (3 movies at a time)

Our total is $279.71 per month.

Of course, we get reimbursed $90 a month for our phones, although that’s taxed, so we’ll call it $75 a month. That brings us down to $204.71 a month.

Additional Costs of the New Necessities
Since we’re spending all this money to entertain ourselves and stay connected, we have to earn at least $2456 a year to pay for all of it, on top of our actual necessities like food and shelter. We probably need two incomes to pay for all our new necessities, so that also means daycare, extra commuting costs, as well as less time to enjoy all those modern benefits.

I’m not suggesting that we give up our cell phones and broadband access, I am suggesting however, that we all take a hard look at how necessary the things in our life are and what we can cut. If we had to, we could cut Real Rhasody and Blockbuster easily. We could also reduce our cable bill. The home phone I insist on keeping because we live in earthquake country and landlines/corded phones have never failed me in a major earthquake.

What could you cut?

This weekend I snagged on a good deal on a roasting pan. It was on sale at Bed Bath & Beyond for $20 with a $10 mail-in rebate. In addition, I was able to use one of their $5 of $15 coupons on the purchase. That will bring my total cost down to $6.46 (including tax) for an 18” roasting pan with rack. If you want one, the rebate goes through 12/31/2010. It was a fantastic deal, but I only jumped on it because I knew it was the right time.

When Is a Good Deal Worth It?
I don’t jump on every good deal that comes my way. For example, this week I’m snapping up deals on Coke, vegetable oil, peanut butter, and Tums. Last week it was tomato sauce and a roasting pan. However, I don’t jump every time I see a deal. For example, a few weeks ago Cost Plus had ceramic rectangular baking pan for $10. Not a bad price, but not worth buying because I already have a ceramic baking pan.

Here are my guidelines for jumping on a good deal:

Immediate necessity. I don’t actually need the pan this week, but I know I will need it soon. So, it passes the first test.

Repeated use potential. This is a roasting pan, so I know I will use it repeatedly. I see lots of good deals in Target ads that would be fun to have, but they might not be things I’d get a lot of use out of, so I don’t rush out to buy them.

Not duplicative. If I’d jumped on the ceramic baking pan deal, I would have been duplicating something I already had, in fact something I’d bought just two weeks earlier. While I already have a roasting pan, it’s not a good one. This year, my family came to my house for Thanksgiving and my mom had to bring her roasting pan with her. She inherited her pan from my grandmother, but obviously that’s not likely to happen in my case for another 20-30 years, too long to wait for a roasting pan that actually fits a turkey.

Will be used quickly. This one applies to food. I only buy enough of a good deal that I’ll be able to use it all before it expires. I use a lot of peanut butter, so I always snag those deals.

When Is a Good Deal Not Worth It?
The primary time when a good deal isn’t worth it is when it’s not really that good a deal. It might seem like a deal, but if you follow prices, you know it’s really not. For example, at Christmas, I got 40 rolls of toilet paper for $10. That was a good deal at my local stores. I’ve also seen deals where the toilet paper would have been $15 – not quite as good a deal because I know it will go lower.

If it’s something you don’t need and don’t have a use for, then it’s also not a good deal. The ceramic baking pan is an example. I needed one, so I bought one I liked at a good price. I didn’t need two, so I didn’t buy a second one.

There is also the issue of storage. When I lived in an apartment, it wouldn’t have been as easy to stock up on the toilet paper deal. I probably still would have, because I could stuff it into various crannies, but I probably would have held off on the roasting pan due to storage problems. If you don’t have room for the stuff you buy, then it’s not a good deal.

Finding Deals that Are Good for You
I carry a little notebook with my everywhere. One of the items in that notebook is a list of things I need to buy for my house or for myself. Then, every Sunday I check out the weekly ads for the stores I know are likely to carry those items. I quickly scan for items on my lists. If I see a good deal, I add the store and the item to my weekly to do list. If there’s a coupon for the item, I put it in the pocket at the back of the notebook. By comparing my list to the ads, I’m less tempted to jump on deals that don’t really work for me.

Some online banks let you create what they call sub accounts in your master savings account. Essentially, these allow you to make one deposit and then divide the money between several uses for easier tracking. If your online bank allows this, then simply label the subaccounts things like vacation, property tax, homeowner’s insurance, etc. Figure out how much you need to contribute to each account, then make one deposit and divide it.

Other online banks don’t allow subaccounts, but you can still allocate your money in your personal tracking.

Create a SubAccount Tracking Document in Excel
I use Excel to track our annual or semiannual bills, how much we’re allocating each month, and how much we have in the account total. If we’re able to pay a bill out of our checking without dipping into the subaccount, I just start that cell over at one month’s balance, or zero if I simply reduced that month’s savings deposit accordingly.

subaccounts starter tracking

Here’s a sample account. You can see that I’ve labeled the months in the columns, and put the accounts in the rows. I also noted the current balance of the subaccounts after the month’s deposit is made and the available balance, which is the difference between the starting balance plus deposit, and the withdrawals and earmarked funds. At the bottom, I list the monthly contributions to each account and the month’s the bills are due.

How to Track SubAccounts
Here are step-by-step instructions for updating the sheet once a month.

subaccounts in action

1. After the interest is applied and you’ve made your monthly deposit, log into the account. You’ll see the starting balance and the interest. Add these two together and enter that number as the starting balance for the month.

2. Enter the amount of your deposit.

3. If you made any withdrawals (or expect to), either for bills that were due from subaccounts, or for items that weren’t in the subaccounts, note it in the withdrawal column.

4. Add this months’ contribution to last month’s balance for each subaccount. This is your new balance.

5. If you paid any of the annual bills this month, subtract the bill amount from the subaccount balance. If you were able to pay it without using the subaccount funds, simply add that money to your available balance. If you paid it from subaccount funds, subtract that amount from the subaccount balance and note it in the withdrawals column.

6. If you still made the full deposit, divide it accordingly among the accounts. If you reduced your deposit by this month’s contribution for the bill you paid, don’t add money to that account’s balance.

7. Repeat next month.

Here are April and May in action. Let’s say I had to pay the earthquake insurance in April. I noted the amount ($1150) in the withdrawals. However, I made the month’s full deposit, so I allocated a portion of that to the earthquake insurance subaccount ($115). Then in May, I made all the deposits as usual.

Once you get the hang of it, it’s a matter of minutes to update the sheet. Then you’ll never have to worry about using earmarked funds if an emergency comes up.

Recently someone told me about his budgeting method: he finds out that latest he can pay a bill without incurring a late fee and then mails the payment just in time. For some bills, this is normal because you incur a late fee the day after it’s due. (Hi, credit cards.) With other bills, you might not get a late fee until 15 days after the due date, but that doesn’t mean you should get in the habit of “budgeting” for late payments.

Budgeting to Pay the Mortgage Late
Mortgages are a prime example of this, and the example my friend used. He discovered that although the mortgage is due on the 1st, he doesn’t get charged a late fee until the 15th. So he pays it around the 14th. This is ridiculous. I expect that this pad was created to allow for three things: 1. Holidays and weekends that occur on the 1st, 2. slow or lost mail delivery, 3. Payment foul-ups like mistaken processing. It’s not an invitation to pay super-late every month.

In fact, it’s not a good habit go get into. What happens if there’s a foul-up with the payment you mailed on the 12th? What if the computers have an error in automatic billing? Now you have only yourself to blame for the late payment.

Budgeting for Late Utility Bills
Utility bills also frequently have long grace periods after the payment is due, but this is a dangerous game to play. If you mess up and mail your payment too late to miss the late payment cut-off, not only will you get slapped with a fee, but they could shut off your power, gas, water, or phone. Is that a risk worth taking?

If you can budget to make the payments late, then you can budget to pay them on time. Yes, you’ll have to spend less for one month, but then you can get on track to pay your bills when you’re actually due. Gaming the system by paying after the bill is due but before you incur a late fee is a slippery slope that could quickly lead to multiple late fees.

So why does he due date chase? So he can spend whatever he wants in the meantime. He doesn’t want to budget his money or spend carefully. He’d rather live on a whim and scrape together the cash at the last second.

If you’re really strapped, then these extended grace periods are a boon, but you shouldn’t plan for them so you can spend whatever you want in the meantime. Instead, sit down and make a real budget. If you can’t do that, then you need to cut your spending so you can pay the bills when they’re actually due.

Last week I read a post in Wise Bread that left me confused. The author argued that you don’t need to make a budget, you just need to “leave a little slack,” by which he meant underspend. His argument was that you can’t be prepared for life’s little emergencies if you budget every penny, because you don’t have flexibility. I think this argument is a willful misunderstanding of how budgets work by someone who just doesn’t like budgets.

When Is Not Having a Plan Actually a Plan?
As the author describes it, he does actually have a plan. His plan is to spend less than he earns. In order to do this, he has to have some idea of how much he earns, and have a mental tally of what he spends every month. He may not think of it as a formal budget, but it’s a budget nonetheless. If he spent willy nilly, he wouldn’t be able to intentionally spend less than he earned, because he’d have no idea when he reached that point.

Budgets Don’t Contain Hard Numbers
This is where I think people get scared – they worry that if they make a budget, then they’ll only have $61 dollars to spend on food and $13 to spend on personal care, etc. This is not how budgets works. Budgets work in round numbers. We don’t budget $423 a month for food. We budget $450. We usually come in less, but if we come in over, it doesn’t bust our budget. We still have flexibility in there because other categories will probably come in low.

He also argues that budgets are pointless because prices change. If you budget $41 for fuel and the price goes up, you’re screwed. That’s just poppycock. Again, budgets adjust. For things that can vary wildly like fuel or energy costs, you pad the typical amount to cover possible overages. Then if you have extra, off it goes to savings for the time when you have to exceed the pad.

Budgets Aren’t Adjusted Every Time an Expense Changes
This is the other misunderstanding. The author believes that you have to change your budget every time one factor of the budget changes. This just isn’t true. A budget is an overall plan to make sure you have enough to cover everything and some leftover. Yes, if gas prices rise over time, you’ll need to adjust the budget upward. But you don’t have to adjust the budget because you spent $30 extra on groceries on month. You don’t have to make a whole new plan every time one item changes for one month.

My concern with this “leave a little slack” plan is that it’s hard for people just learning to manage their finances to just “leave a little slack.” Certainly, you can do that once you’ve gotten out of debt and comfortably understand how your spending correlates to your income. But if overspending got you into debt in the first place, then a budget is the only way to retrain yourself.

It’s like going on a diet. You’ll lose weight if you cut calories for a few weeks, but it will come back when you start eating normally again. However, if you learn to change the way you eat by adjusting portion sizes and truly understanding the impact of the foods you eat, you don’t need to track it forever. Money is the same way – eventually you can get there, but don’t start there.

Each year, American Express compiles a yearly spending summary and then sends me a link to it. It totals my spending by category and subcategory. I use it to see if any area of my spending is out of whack. Since we make most of our day-to-day purchases on the card, I can easily get a snapshot of my expenses. If you don’t have an American Express, or don’t use just one credit card for all your purchases, you can make your own spending summary. In fact, you should make a summary for ALL of your income and expenses to make sure you’re still on track.

How to Make a Spending Summary
By now you should have received all of your bills and credit card statements for purchases through the end of 2009. Hopefully you use software like Quicken or an online money-management program, which will make this easier.

If you use either of the above, just go to the reports tab and click through to generate an expense summary for all of 2009. If you don’t use software, then this is going to be tougher and take a long time, so maybe just start with a typical month.

  1. Open up Excel and label the rows by your expense categories and subcategories.
  2. Fill the columns with the amounts. If you’re doing more than one month, label each column with a month. Use this formula in the cell: =0.00+1.00+1.52. In place of the amounts I entered, use actual amounts. That will create a running total.
  3. Go through your receipts or statements and enter each amount into the appropriate column.
  4. Now look at your totals. Does anything surprise you? Do you see any large jumps?

The nice thing about using personal finance software is that you can see where you made each purchase. With an Excel chart, you’ll have to go back to your receipts to detect the pattern.

How to Use Your Spending Summary
The spending summary is good for two things: patting yourself on the back for keeping your expenses low, and spotting the areas where your spending is creeping up. For example, our Amex summary showed $108 at Bars & Cafes for Oct.-Dec. 2009. I clicked for more detail and discovered that all but $30 of that was my husband’s Saturday pizzas. We’ve talked about him not eating out six days a week, but he hasn’t broken the habit. Now I see that if it continues, it will cost us over $400 a year! It’s time to have a talk again.

I also worked out that we spend only $85 a week, on average on groceries. This would be great, if only we weren’t spending another $60-$70 a week on my husband eating out. So, that tells me we have enough money in our budget to spend more on groceries if I can at least get him to eat at home on Saturdays.

Of course, some categories will be much higher than you expect, until you dig deeper. For example, our “internet purchases” category was shockingly high, until I clicked through and discovered our laundry machines and blinds were both in that category (rather than furnishing, where I would have put them.)

Don’t use your spending summary to make yourself or anyone else feel guilty. It is what it is. If you find something alarming, talk about it and agree to do better. Then, make a plan to reduce that spending. I see that was my mistake with my husband – we talked about him not eating out six days a week, but he continued to do so. Since he ate out, I stopped buying him lunch food. And then when we discussed it again, he said, “But that’s my pizza day.” I need to start buying him the frozen mini-pizzas he likes again. Maybe that will solve the problem. I can usually get coupons for those.

You should also use your spending summary to adjust your budget if any of the items are markedly different from the amount you planned. That will help you better manage your spending in 2010.

It’s the beginning of the year, which means it’s the perfect time to sit down and redo your budget. Plan out your basic expenses, budget for savings and big purchases, and start yourself on the path to a financially sound year.

Reassess Your Taxes and Income
If you adjusted your retirement or flexible spending account contributions, received a raise, bought a house, had a child, or did anything else to change your finances, then you probably need to readjust your tax withholding and budget for the difference in income. Start by using the IRS withholding calculator, which has been updated for 2010. Enter your income, expected contributions, deductions, and credits. It will tell you exactly how many allowances to claim to arrive at as low a refund or payment due as possible. It’s the best way to maximize your income without getting walloped by a big tax bill. If you need to make a change, file a new W-4 with your employer. You can complete the form and print it right from the IRS site.

Reassess Your Expenses
Now update (or list for the first time) all of your monthly, semi-monthly, and annual expenses. For the irregular or annual expenses, divide the amount due by 12 to figure out how much you need to save for the next year to cover the payment. List the due dates and payment amounts in your budget. Calculate the difference between your income and your expenses. If you don’t have a positive balance, you’re spending too much. If you do have a positive balance, put the extra into savings or invest it.

Plan for Major Expenses
Is this the year you buy a new couch, a new car, or take a vacation? Check your savings to make sure you’ve got what you need to cover it. If you don’t, calculate what you need to save each month and add it to your budget as an expense so you won’t be caught short when the day comes.

Budget for Savings
If you’re not already serious about saving, it’s time to make it a line item on your budget. We usually transfer our money into savings after the second pay period of the month. We like to keep the money in our checking account during the first period as a buffer in case we have a paycheck error (as happened twice last year.) With the money in the account, we know our mortgage payment and bills will clear without us having to transfer money back from savings.

Set Your Goals
If you haven’t already set your financial goals for the year, set a couple of reasonable goals (increase your emergency fund by 20%, for example), and a couple of stretch goals (double your emergency fund). Now figure out the dollar amount necessary for each goal, divide by 12, and add it to your budget as a monthly expense.

Put It In Motion
If you know you won’t remember to transfer the money to savings every month, make it an automatic withdrawal. If you like to move money around, set up the accounts now so you can transfer funds in a flash. Each month, update your budget with that month’s irregular or annual bills and make sure you’re still on track. If you had to spend a little extra on an emergency, deduct it from your goals before you decide to carry it as debt.

Once you get into the habit of using a budget and saving money, it gets much easier every month. Try it for just this month to get 2010 off to a good start.

Last week my husband and I had an actual use for our emergency fund. We keep part of the fund as a cushion in our checking account and part in a savings account. Every month we transfer our excess income from the checking to the savings, but we wait until our paychecks, mortgage, and major bills have cleared. Last week was a perfect example of what could go wrong if you don’t have this type of system in place.

Paycheck Errors Do Happen
Last week, the payroll company dropped a digit from one of our paychecks, yet somehow withheld the tax for a full paycheck (nevermind that they’re not supposed to withhold tax at all.) The result was a very tiny paycheck. It was so small that when my husband went to the ATM to withdraw our weekly cash, we joked that we were living paycheck-to-paycheck because he’d just withdrawn more than the paycheck.

Obviously, the error is being fixed, but in the meantime we had a large credit card payment scheduled for payment and our mortgage had already gone through. Because we had the cushion in the account and hadn’t yet transferred the excess to savings, our bills were paid without a hitch.

The Case against Automatic Savings Withdrawals
Many personal finance experts recommend that you set up an automatic transfer from your checking to your savings at the beginning of the month to keep yourself from spending that money. If we had such a system in place, we could have been in big trouble because our large bill payments would have bounced before we’d had a chance to transfer sufficient money back from the savings account.

Instead of setting up an automatic system, we include the deposit in our monthly cash flow chart and schedule the transfer once we’re sure both of our paychecks have cleared and our bills are paid. (Note, the chart in this earlier post has debt payments rather than savings transfers, but we’re out of debt now.) If you can’t trust yourself to do that, allow a five-day lag between your pay day and your automatic transfer to give yourself time to stop it if something does go wrong.

The Case for the Cushion
In addition to implementing a lag, I recommend keeping at least a $500 cushion in your checking account. It’s not there in case you decide to spend extra. It’s there in case you receive unexpected bills or one of your payments goes through twice. This also happened to us several months ago. One of our credit cards somehow got paid twice. Unfortunately, it wasn’t because they accidentally applied our single payment twice. The money came out of our checking account twice, resulting in a large negative balance on the credit card. We could have asked for a refund of the overpayment, but we knew we had a big purchase coming up, so we used the card for it. However, if we hadn’t had our checking account cushion, the second payment could have racked up overdraft fees.

With direct deposit, it’s easy to forget to check your paystubs, but you should always check your online bank balance to make sure you were paid and paid the correct amount. If not, use your cushion or emergency fund until the error is corrected. It’s better than racking up late fees and overdraft fees. And always make sure that everything is in order before you transfer your money to savings. The piddling interest you’ll earn from those extra two days won’t match the time you save not dealing with the bounced payments and fees.

Yep, it’s another post about the emergency fund and budgeting for everything, this time from a very personal perspective. It’s also about the importance of preparing for the unexpected.

You Never Know When Something Will Go Wrong
It’s called an “emergency fund” for a reason. Most of the time, these emergencies are relatively minor stuff, like your transmission going out. It’s expensive, but you can handle it. Then there are the personal emergencies that send your budget into a tailspin.

Last week we learned that my husband needs surgery. It’s not life-threatening, but it’s better to do it now than wait until he’s old and has more risk factors. He’ll also likely be out of work for several weeks. That’s where the challenge comes in.

On the plus side, this isn’t emergency surgery, so we have time to make arrangements and reduce spending to prepare for the gap in income.

Always Leave a Buffer for Emergencies
After my husband and I bought our house, we had a nice sum left over that we planned to use for furniture. I don’t know if I had a psychic moment, but I didn’t want to use ALL the money for furniture and then replenish the fund later. My husband did, because we’re having guests at Thanksgiving and don’t currently have enough places to sit.

Then that money slowly started vanishing. First, water mains started blowing up all over Los Angeles, so we got flood insurance. Then we opted for earthquake insurance. Those were unplanned expenses. Then we realized we really should get some sort of window coverings. There goes another $1800. We’d managed to spend $3200 without buying a stick of furniture!

And then we got the news. Suddenly we were glad we hadn’t bought the furniture yet.

Know Your Disability Benefits
Our first step was figuring out how much income we’ll have while he’s out. In addition to my salary, he gets state disability. In California, that’s about 50% of your salary, but it typically takes four weeks to actually start receiving benefits. He bought a cheap disability policy through his trade organization, but unfortunately it doesn’t kick-in for 90 days after the start of the disability. His employer also has a disability policy, which we’re getting details about.

Note that disability benefits aren’t taxable, because they’re insurance, so you get the full amount, unlike unemployment benefits, which are taxable.

We realized that we’d have enough to cover our monthly expenses, especially since he’ll be spending less while he’s recovering, but we won’t be able to make extra purchases or save any money while he’s out.

Plan Your Major Purchases and Irregular Budget Items
As I’ve mentioned before, I built an extensive lists of upcoming house projects and major purchases running out through December, 2010. We’ve been parceling those out along their scheduled deadlines, shifting a little here or there. The furniture was on the list for this month and next month. It was already built into our cash flow chart, too.

Our next step was to sit down with our budget and start cutting. We immediately took out $4000 in furniture expenses. We kept the fridge expense, because 1. not getting a new fridge soon will create a new emergency, and 2. Cash for Appliances is coming and could save us a decent amount of money.

We’ll just push everything back by a few months, and then once he’s back to work and we’re saving again, we’ll be able to reprioritize our list.

We’re very fortunate that we were able to build up savings, and that we have low enough expenses that we won’t be in trouble with one of us out of work for several weeks, however we vowed to increase our emergency fund even more after all this is over. You never know when something will go wrong.

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