My mom once told me about a story called Mama’s Bank Account. If you’re not familiar with it, the story is based on a turn-of-the-(20th)-century immigrant family.
They barely get by, but somehow Mama has scraped together a small bank account. It’s a source of pride that, no matter how bad things get, they have a little money stashed away.
So whenever expenses reared up, Mama would offer to get the money from her account. And the rest of the family scrambled to find an alternative.
The twist is that there never was a bank account. Mama was smart enough to know that what the family needed was more about psychology than actual finances.
The story reminds us of two things. First, you can pretty much always find something to cut if you’re motivated enough. Second, sometimes finances are more about your state of mind than the state of your bank account.
So now we swing around to the rest of the post’s title.
We were hit with a $1,500 car repair bill. A lot of preventative maintenance that will avoid larger bills in the future (hoses, belts, mounts) and the actual item we needed repaired (power steering pump).
This comes at a particularly bad time because this month had only 20 workdays in it — and I took three of them off for FinCon 2012. Basically, we need most of Tim’s disability check to cover the shortfall.
The good news is that the repairs will be on the next statement, which gives us an extra month to build up a payment. That said, we still won’t have $1,500 by the middle of November.
None of this takes into account our emergency fund. It’s sitting at about $800, plus around $350 for the Christmas savings challenge.
So technically we do have the money. But that’s the thing: We have the money. And if we pay the bill, we won’t.
Of course, we also won’t have a $1,500 bill hanging over our head. But did I mention the part where we’d be draining our emergency fund yet again?
I know that EFs are there for this sort of situation. The most logical thing is to just take the money and throw it at the credit card next month.
But it’s incredibly disheartening to finally have something that you can actually call an emergency fund… only to drain it again. It starts to feel like we’ll never get ahead.
Then again, it’s stressful to have a balance on the card.
Then again, this month was an aberration. With our normal income, we can pay that balance off by December.
Then again, nothing’s a sure thing.
Then again… well, you get the point.
In the end, I think psychology is going to win out over financial logic. If this is what stresses me out least (out of a bad set of options), it’s probably worth $20-40 of interest.
And if the credit card still isn’t paid off by January, then we can throw the emergency fund at it.
Feel free to weigh in, folks. We’ve got another month before we have to make a decision.