Hey there! Long time, no blog, huh? Sorry, sorry! Winter was coming, and I had only so much time to enjoy my car, ya know what I mean? Also, life.
Don’t worry—advances in the art of living beneath your means happen … glacially.
Case in point:
I was talking to a friend of mine recently and she reminded me of the shoebox full of cash I used to keep in my room when we were in high school. Lest you think I was involved in any nefarious activities—as all bookish, overweight, Asian kids are wont to do—the cash came solely from the tips I earned at my summer waitressing job. The money—in small wrinkled bills—wasn’t tallied regularly, earmarked for anything in particular, or even very well hidden, but, dammit, if I didn’t want that money close at hand.
I’m older now, and I don’t keep money in shoeboxes anymore, but my views about a (metaphorical) pile of free, unallocated cash have not changed one whit. Say it loud, say it proud—CASH IS KING. I don’t mean, of course, that you literally use paper currency and coins in your everyday transactions. I mean that you have a store of money that you don’t NEED for anything in the present moment or the foreseeable future.
This honey pot is a girl’s best friend. Acquiring this stash is the first step in the virtuous cycle that is—dramatic pause—LBYM, and one of the most important things you can do to avoid the vicious cycle that is living above your means, or LAYM (pronounced “lame”).
How much you’ll need in your stash will be driven by your specific circumstances—federal employees, read this—but the important thing is to get. It. Going. Big plastic water jug? Throw in your loose change! Acorn app? Round up for the winter! Shoebox? I approve!
Trust me—if you want to do the one thing that will help your financial situation more than anything else, start throwing money in a (metaphorical) shoebox. After awhile, though, take the cash to a bank. You don’t want to end up like Al Bundy … and not just Al Bundy from the shoebox episode.
Don’t believe me just yet? Let me give you three examples of how that free, unallocated cash might come in handy.
#1 You lose your job.
I don’t care who you are or what you do—this can happen to you. And sometimes, in the grand scheme of things, it’s the right thing to do (unethical practices, impossible tasks, a handsy boss). That said, your ability to weather a spell of no income is directly tied to how much cash you’ve got squirreled away.
Even if you immediately downshift your expenses to Survival Mode™, a girl’s still gotta eat, live, and put gas in her roadster, right? Even if you get another job in a New York minute, you’re probably looking at at least a couple of weeks with no money coming in. Ahem, best to have some money ALREADY IN then.
#2 You get hurt.
OK, so maybe you have some serious job security. I mean, no one plays James Bond in those movies like you do, right? That’s a dangerous job, though, with all those stunts and double entendres. What if you get injured? Even those of you with “good” health insurance probably have a pretty high deductible, i.e. the amount you pay out of your own pocket before any insurance kicks in. Our family’s health insurance deductible is $6,000. That’s right, we shell out a whopping $6,000 before our “insurance” pays anything. Then again, that’s only enough to set 1.7 broken arms.
Haha—kidding! It’s actually impossible to find out how much any medical treatment costs!
I’m going to need a bigger shoebox.
#3 There’s a really big clearance sale on school supplies.
So you need money to live … and to live with functional limbs, but hey, what you really want to be able to do is … take advantage of arbitrage.
arbitrage (noun): the gleeful act of buying up all the deeply discounted Paper Mate Flair pens in stock on September 15th because the store made bad inventory decisions, your kids’ teachers (next year) will love them, and yo, those things are not cheap
I’d add looking at disability insurance. Health insurance takes care of the “medical” costs, but partial income replacement is something to consider. I purchase mine through the State Bar of Wisconsin at a great rate. Employers often offer this at no cost to an employee. Good to hear from you again Grace!
Totally second this notion. It’s the first piece of advice I give to pretty much all my single girl- and guy-friends. If there is no other source of income in your life, long-term disability is a must have. Even if your employer provides it, it’s often only at the 20% or 40% of income level. So it can make sense to look at topping it off to a more practical replacement income level.
Yay Grace is back! Keep writing!