common sense that's not so common

So i was browsing the message boards at MSN Money's-Woman in Red... and it dawned on me.

Speed bumps... they come and go... but the real truth behind them is to remind you that finance is a journey that has no real destination. You'll continually revise your budget when you forget things, rely on savings at times when the world leaves some dung on your doorstep... but what i've come to realize is that you have to go through the speed bumps to understand why things are the way they are.

The Journey:
You wake up one day, most likely after a speed bump from life that you charged with your CC and you can't understand where your money is going and the debt is starting to rack up.

So you start watching where everything is going and you eventually set up a budget.... after awhile you think you got it down... but then life throws you a speed bump--auto repairs, a broken household appliance, medical bills... whatever... and you realize that you can't just try and pay off your debt with everything leftover at the end of the month.... because when you get into a pickle you just end up racking the debt back up....

but this bump reminds you that you really should have an emergency fund... so you keep paying off your debt but you put aside some money for emergencies.... even if its only $10 bucks a week... you begin to plan to not rely on credit cards.... and eventually, (yup you guessed it) another bump comes your way.

While this time that emergency fund you created will get dented or completely used up, you'll be able to avoid adding that to your CC hopefully.... you realize its importance and you start bumping that emergency fund back up...

but you get kind of tired seeing that fund drain everytime you need new tires or forget about that annual car insurance bill you need to pay. Are those really emergencies??? or can you plan for those kind of things?????? This leads you to start focusing on that real emergency fund... the "i lost my job" kind of emergency fund....
and eventually when you get that real emergency fund set up and you start planning for those annual bills...

and all along speed bumps will continue to happen at various intervals in your life... you could be laid off, injured and can't work, find out your having an unexpected family.... the list goes on...

But here's where the light bulb comes on... when these speed bumps come along, ask yourself how your going to be able to avoid this happening in the future... then start making that a priority..

A lot of people have trouble with raiding there emergency funds with non emergencies... they treat their emergency funds as a savings account for anything and everything.... but eventually the real emergency comes and they realized they spent that important stash of cash on tires...

So how to not raid that E-fund as often? Try to learn from your mistakes.

• EXAMPLE: have trouble remembering that car registration, smog, and auto insurance fee? take those fees and divide them by 12 if you pay annually or 24 for that every other year smog... add them up and every month take that amount and set it aside in a savings account and call it something fun like "keeping my car legal fund" or whatever... when these bills come along you got your basis covered... You might also want to call that auto service place and get a quote on your next maint. check.... and depending on how much you drive find out the "monthly cost" and set it aside in a different account or the same account...

yes... less will go into your emergency fund each month if you only have so much you can save... but you begin to learn to plan for regular expenses... and that Real emergency fund becomes more real..... and it won't be depleated for your car's normal stuff...

you'll have a car fund... and it also won't hurt as much to pull money from a car fund since that was your intentional purpose.... to keep your car running...

That model can be used for a lot of things... you can even have it automatically taken out... treat it like a bill if you need to.... but the nice thing about it is that you'll earn interest on the money you set aside...

When you take the money out to pay for that service repair or whatever... you can also withdrawl whatever interest you've earned over the months... (hey all those pennies and dimes add up) and you can use that money to treat yourself to ice cream or some fancy $4.00 coffee as a reward for planning ahead.

make it fun... but learn from your past experiences... Take a look and see over the past 6 months, what came up that made you dent it??? how can you prevent that from happening again? the move back what about over the last 12 months??? Xmas shopping go crazy??? set up a small account for it!