Financial Emergencies and Living a Debt-Free Life

A recent report I read revealed a shocking statistic about financial emergencies. It reported 47% of Middle-Class Americans couldn’t cover a $400 emergency on their own.  They would need to borrow the money via credit cards, family loans, or other means.

An odd rush of emotions came through as I read Neil Gabler’s excellent article in the Atlantic on this topic. 

The Dread of Financial Emergencies

The first thought that came to my mind was familiarity.

dealing with Financial Emergencies and debt free living

For a while, we had been doing quite well for ourselves, and life was good. Then the bottom fell out of our lives financially.

My husband’s pay dropped to 1/3 of what he had been earning as a tool and die, skilled tradesman. We had to figure out how to deal with life on far less money.

In fact, my books on frugal living came out of the season where we were earning way less than what we had been. The lessons came from times I had to figure out how to make ends meet as best we could.

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Suffice it to say, I know what it’s like to live in dread of any financial emergencies.

Financial Emergencies Fund & Hoarding Money

The second thought emerged as I was mulling that over and reading through Mr. Gabler’s article.

While reading, our trusty mechanic called. My husband’s reliable car had just stopped on us on Saturday, so we dropped it off to him. We had to replace the fuel pump and a few other things.

The bill? $400.

“Hold on a sec. I’ll be right up.” I took out the $400 without a second thought and paid the bill.

As I handed him the money I burst out laughing. This is the target amount people making far more than us can’t come up with in an emergency.

I’m no longer in the class of people that wouldn’t be able to pay for a $400 emergency. Praise God.

The most amusing part to me?

Our income still isn’t restored to what it once was. We fluctuate at the border between lower middle class and poverty, given our family size.

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A huge chunk of it is grace. We pray daily that God will allow us to save, and only live on what is absolutely necessary. But, through our hardships, we’ve become money hoarders in some ways. Not in an evil way, but so that we’ll be free to meet financial emergencies and also bless others.

I find it ironic in many ways.  We earn about 1/4 of what Mr. Gabler’s household earns, with more kids than they have.

And yet….$400 car repair bill? Let me pull that out for you.

It feels much better inside of me than, “Oh no! What are we going to do! ARRRRRGH!” Been there, done that.

Fighting off the Creep of Lifestyle Inflation

dealing with Financial Emergencies and debt free living

An even bigger chunk is our prayer and goal to fight off the slow creep of lifestyle inflation.

What is lifestyle inflation?

Lifestyle inflation is what happens when you get a raise and thus increase your spending. It happens small and subtly.

We don’t allow the small increases in our incomes to just become an increase in spending. Or at least we try not to. As much as possible, we’ve been putting that into the emergency and home repair fund. We just pretend like that money doesn’t even exist.

Sometimes life happens and we have to pull it out for a true emergency, but most of the time, we just let it accumulate for the big things we need.