It’s Only Money

Unexpected expenses can be extremely stressful. But it's only money. Large bills are not a threat to the things that really matter like health, relationships, and wellness. Every week I write about money. Sometimes in a roundabout way. But ultimately, this website is about growing wealth by making better financial decisions.

Life is not about money, but money can help us live a better life.

When you’re living paycheck to paycheck, unexpected expenses can be extremely stressful. The news of a major home repair or car problem can be a serious punch in the gut when you’re just trying to get by.

It hurts when you’re aggressively building wealth or living off your savings too.

That’s why its good practice to prepare for financial calamities by building an emergency fund, in addition to proper insurance coverage.

But as hurtful and stressful as a big expense may be, it’s only money. It’s not a threat to life or health and doesn’t need to threaten relationships or true happiness. Those are the things that really matter.

Lunch with a Pseudo-Mentor

The title of this post comes from a conversation I had years ago with a former manager. This person was perfectly situated to be a mentor. But I disagreed with him about how to conduct business at many stages of our relationship. Because of this, I never considered him a mentor.

I learned from his mistakes more than successes. Things were always going wrong and he would often considered himself the victim.

The mistakes were usually in the form of trusting people without a legal agreement, trusting without verifying, or assuming some business would commence that was never finalized.

One day during lunch, he told me that a project suffered a large contract loss. The loss was a major blow to revenue.

When I realized the gravity of this loss, I said something like that sucks. I assumed that someone had screwed him again, and was about to hear another tale of woe.

But instead, his response took me by surprise. “It’s only money”, he said.

And that was that. He was over it.

He may have taken that line from an old movie.

Turns out, he was having a difficult year with family health problems. The blip in the business road wasn’t nearly as devastating as what he was dealing with outside of work. Money wasn’t important to him at that particular moment.

Life went on.

Why I’m Increasing my Emergency Fund

Recent events have convinced me that I need to increase the amount in my money market account.

The interest rate for my new CIT Bank account is now up to 1.85%, so I was planning to increase it somewhat anyways.

But more importantly, I’ve realized I don’t have enough cash available to pay for a major home repair.

We’ve been lucky for the past seven years at both our home and rental property. No major repairs aside from some brickwork.

I used to think about my emergency fund as a backstop in case I lost my job. This was tested late last year, and I used the fund to keep us afloat.

But my parents recently had two back-to-back costly home repairs that changed my thinking. If something similar would happen to us, we’d have to borrow from other sources.

At my parent’s house, the plumbing that takes the wastewater out of the house had a major clog in the basement from decades of use. The plumbers had to bring in the jackhammer, dig up the basement floor and a hole outside the house to replace the pipe.

It was a big messy job. And expensive. Insurance will cover some of the repairs but it’s going to hit my parent’s emergency fund hard.

Then two weeks after the plumbing problems, a 70-foot tree fell from a neighbor’s yard, toppled a significant tree in my parent’s yard like a domino, downed some big branches from neighbor’s tree, crushed the fence, then snapped an old telephone pole with a basketball hoop on it.

All on a calm and sunny day.

The description and pictures don’t do it justice, they tell me. Thankfully, my Dad wasn’t mowing at the time.

Now there’s a huge mess. It’s going to take a ton of manual labor to remove all the wood, then haul it out of the yard (it’s down a big hill, difficult to get it to street level).

That’s going to cost a decent chunk too. My parents have the cash on hand, but we would not be able to cover both problems if they happened concurrently.

Our properties are newer. My parent’s home was built in the 1940’s. But the events still make me want to have more financial control over the next calamitous home repair. As of today, our liquid reserves are insufficient.

Savings Segmentation

Not long ago, I wrote about how to manage excess cash flow when income outpaces expenses for the month. I segment our savings into different pools, a vacation fund, a car savings fund (as a result of swearing off car payments), and our general fund which also serves as the emergency fund.

Combined, these funds should be able to cover any major home repairs when push comes to shove. But that would defeat the purpose of allocating money for specific purposes. The vacation fund we’re building is already budgeted for a family trip next year. The car fund is still growing so I can buy a brand new car in four years or so.

What I think needs to happen (and this is just becoming apparent as I write this), is I need to create a separate segmentation for emergency savings. Then load that up to a certain level (3-6 months expenses plus?), and use the general savings fund almost exclusively for investing.

The dilemma I face is that my overall cash holdings will be much larger than today. Usually, I want to use most of that to build income streams. But I guess I’m becoming more risk averse in my forties.

The other downside is while I build up the emergency fund, less money will be available to invest.

Having a high-yield money market account at my disposal alleviates this dilemma somewhat because I’ll earn a return on par with some of my dividend growth stocks, though without the capital appreciation (or risk).

But I’m not ready to stop investing new capital in order to build the fund more rapidly. So I’ll be gradually increasing our cash pool until meeting a to-be-determined arbitrary level of cash where I’m comfortable.

It’s Only Money

One reader recently called a post of mine philosophical. I get annoyed when bloggers get too philosophical. So I try to avoid that when I can. But I write so much that sometimes I can’t help but go in that direction.

I’m about to again.

Spending so much time thinking about and writing about money can make a person seem pretentious. I hope I don’t come across that way.

I see money as a tool to build the life you want. Not as a way to impress people, acquire fancy stuff, or go to fancy places.

Smart money decisions are a result of knowledge. Knowledge is gained through reading and thinking. Good decisions will lead you down the path you want over time.

But none of that is as important as your health, the health of your loved ones, and the relationships, life events, and adventures that bring you happiness.

Sometimes that message is lost behind trying to count and analyze every penny that goes in and out of our pockets. But health, relationships, and the activities that bring you mental wellness are the main drivers that should be leading the important decisions in our lives. Not money.

Photo by NeONBRAND on Unsplash

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4 Responses to It’s Only Money

  1. Marc @ Vital Dollar September 6, 2018 at 7:18 am #

    Sorry to hear about your parents’ situations. We have some very big trees on our property and one of my biggest fears is one of them falling on our house. We also live on top of a hill and it gets pretty windy – that’s when I get nervous. But at least their situation helped you to make a positive change that could possibly help you and your family in the future if an emergency arose.

    • Retire Before Dad September 6, 2018 at 8:21 am #

      The plumbing issue was a long-time coming and we knew it would eventually be fixed. The tree thing was a total surprise, and the mess is huge! My parents have it under control with plenty of money set aside, but I do not have that much set aside. I have other options to take care of it, but I prefer to do so with cash instead of credit. And I don’t want to sell any assets to pay for it.

  2. Mr. SSC September 6, 2018 at 11:33 am #

    Man that’s rough getting hit with both of those in short order. We just moved and even though the AC is 4 yrs old and the furnace is 2 years old, we didn’t realize they were very undersized for the house. Basically, they don’t keep it cool in the summer and constantly run, and I don’t know about winter because we’ve just been here 6 weeks. $8200 later, it’s getting replaced today. I did a lot of negotiating and got the cost $3k lower than the other companies closest bids, due to some haggling and negotiating on my part. The biggest thing is like your parents tree, we weren’t expecting that major repair this early on due to the “young” age of the existing equipment.

    Like your boss, “it’s only money” entered my head, but that is mainly buoyed by the fact that I had a 3 month remote gig we weren’t expecting and I still have “extra” paychecks coming for for 2 more months. Of course our other house still hasn’t sold, so there’s that too… Like you, I think a bigger emergency fund of cash isn’t necessarily a bad thing.

  3. Mr. Robot September 7, 2018 at 4:59 pm #

    We also have a firm emergency fund in place which will last is a few months (about 6) without having to worry whatsoever.

    Sure it would provide a big boost in my portfolio but that peace of mind is worth soooooo much more.

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