A huge car repair.  A major repair to your home.  As Forrest Gump (and a million other people) can tell you: Shit happens and, despite our best efforts, we won’t always be prepared.

Over the last year, I left my comfortable corporate job and launched a business.  I rearranged our budget and expenses so we could live basically the same quality of life on approximately half of the income.

It was a scary step, but I felt comfortable because we have the right insurance, my car is paid off with relatively low miles, we keep our house in great repair, and our credit is excellent.  My son started kindergarten this year, so daycare costs are gone, and I don’t spend money eating lunch out several times a week. I rarely buy clothes right now, unless it’s a sensational deal.  I can spend more time planning groceries to optimize rebates, sales, and fuel saver points. We have a small emergency fund. We were financially ready for just about anything that came our way. I’m not going to lie, I felt a little smug. I know better.

So picture it – I was getting ready to start a side hustle driving for Lyft.  I knew I needed tires and there was a great sale at Tires Plus. Still feeling smug, I had new tires and windshield wipers put on the car.   I was going to drive for Lyft for a couple of months and recoup the cost of these tires. I was so prepared.

The very next week, the car lost a huge amount of its power.  I called around and made an appointment. The earliest I could get in was a week away.  To make a long story short, the first estimate I got to repair the car was $7,600. That is more than our emergency fund.  The car is only worth about $10,000 in good working order. Is it even worth fixing? But it has brand new tires. And it looks great!  What the @#$% should I do? It made me stressed, a little angry, insecure, sad, etc. All of the bad feelings.

It Happened.  Now What Do I Do?  

Instead of giving in to those feelings (because what good would they do?), I launched a major fact-gathering mission.  I got a second opinion on the repairs. I talked to a family member who used to work in a Ford dealership, people on social media who are experts on my type of car, the banker, the insurance agent, my CPA.  Now I could make a decision based on facts instead of fear, scarcity, and stress. Three things that can almost guarantee a bad decision, by the way.

There are three main ways that a major repair can be funded if you don’t have an emergency fund, or if your emergency fund is not large enough.

  1. A short term loan against your car or a home improvement loan.
  2. A credit card.
  3. A personal loan from the bank or a family member/friend.

None of these options are ideal, but we are talking about something that HAS to be fixed and can’t wait (otherwise you would save up for the expense).

Now that you have this new debt, how do you adjust your budget? 

The short answer is Hustle.  You start from scratch to build a starter emergency fund.  You start Dave Ramsey’s debt snowball. And where is this money coming from?  There are a few options for that, too.

  1. Take advantage of overtime opportunities at your regular job, if available.
  2. Start hustling for promotion or salary increase opportunities at your current job.
  3. Get a second job.
  4. Start working side hustles.  Sign up here to get a list of my favorites.
  5. Reduce your expenses by using rebate apps, coupons, and timing your grocery shopping to take advantage of sales or fuel saver points.

Make a hobby of reducing expenses and increasing income until the emergency fund is in place again and the debt is paid.  Oh and one more thing: No matter how much planning you have done, no matter how secure you feel, no matter how great things are going,  NEVER FEEL SMUG!