How to Roll with the Punches

Last week, my family was just beginning a six hour trip home from Orlando, Florida when a major brain cloud of forgetfulness appeared that cost us money. After getting the family wagon loaded with kids, wife, parents, and luggage at a record setting time for punctuality and efficiency, our crew was ready to go. (It is important to note the small victory this appeared to be at the time because I am known to operate on “island time” when in vacation mode.) Google Maps was even confirming an estimated arrival that would leave us plenty of time at home to finally put lights on our sad and extremely naked tree and to do some Christmas shopping​.

Everything was going as planned until the alarm bells went off in my head at the 15 minute mark. In my haste to set a family record for the fastest trip home from Orlando, I suddenly realized my cell phone was not in the car. I knew it wasn’t back in the hotel so it was in the only other logical place people leave cell phones whilst getting ready to embark on a 6 hour journey…on top of the minivan.

Oops! After a surprisingly calm and composed initial reaction (I have been known to flip out in similar situations in the past…yes, I’m a work in progress), we attempted to use the Find my Phone app but this was unsuccessful. The phone was lost somewhere in the middle of busy I-4 traffic.

Instead of spending the rest of my weekend doing fun family activities, our Sunday evening after returning home cellphone-less was spent in a Verizon store replacing a phone. This not-so-brilliant move on my part came at a financial cost of approximately $250 surrounding an impulsive decision to switch to an Android phone. My colleague, Erik Carter, has written about and explored the topic of reducing cell phone costs in the past but I needed a phone immediately due to tight work travel plans and did not have too much time for research to follow his guidance on ditching a cell phone contract or finding a new plan.

Making snapshot decisions with our personal finances can often be quite costly. Financial gurus such as Dave Ramsey commonly refer to making poor decisions that have a negative impact on our financial life plans as “paying the stupid tax”. Some of the more obvious examples of the stupid tax include not paying bills on time, buying more car or house than you can afford, using credit cards to live beyond your means, buying lottery tickets, or just spending money in any not-so-smart place.

But if you’ve ever made a poor decision with your money or made a mistake in life that ended up costing you money, you are officially NORMAL.  I have talked with many people over the years and have yet to find one person that hasn’t made some money management mistakes. The key differentiator that separates people who have a strong sense of financial wellness from those who are financially stressed is how they bounce back from minor or major setbacks.

Thankfully, my mistake wasn’t so costly that I had to dip into my emergency fund or feel the financial impact for years. So instead of having a financial freakout session we used the “roll with the punches” concept of budgeting highlighted by the You Need a Budget app and many personal finance gurus. Instead of chalking life happens moments such as losing a cell phone (i.e., throwing away money) as a budgeting failure, it is important to realize that unexpected things will happen. Rather than get frustrated when these surprises create overspending, it is essential to avoid letting setbacks lead to assumptions that “budgeting doesn’t work” or “it’s too complicated” to track things when life happens. Avoid the temptation to quit and always stay in the game and find ways to adapt.

For example, we now realize that our cell phone expenses for the month are $250 over budget. This also comes during a busy holiday season where we have some higher than normal grocery expenses related to birthday and Christmas party entertainment. Bottom line: rather than throw our hands in the air in frustration and give up on budgeting, we have to roll with the punches.

Let’s say our total overspending is now $350 for the month. Our challenge as a family is to adjust the money that’s allocated for other categories such as clothing, vacation funding, or the car replacement account. If we don’t have enough resources left over in those categories or just didn’t remember to make the necessary adjustments, the YNAB process of budgeting deducts the amount of shortfall from next month’s available money to budget. According to YNAB, this important budgeting concept of rolling with the punches keeps you “on your budgeting feet so when unexpected things come up, you don’t quit. You roll with the punch and start each month with a clean slate – a huge psychological boost.”

Just remember that it’s inevitable that setbacks will occur that affect our finances. Some are out of our control and others are completely self-created such as my momentary lapse of reason. I can picture my poor little iPhone in it’s protective Otter Box shell hanging on to the vehicle as long as possible while I was masterfully maneuvering through interstate traffic like a skilled NASCAR driver. It kind of reminds me of a scene from National Lampoon’s Vacation where Clark W. Griswold mistakenly left Aunt Edna’s pooch tied to the back of the station wagon. (“Poor little guy, probably kept up with you for a mile or so.”)

Thankfully, no animals were hurt in the making of this little financial life lesson.  Just one meaningless piece of technology in life’s big picture and my pride were left damaged after paying the stupid tax.  The good news is that with a few proactive adjustments, our family’s spending plan has the flexibility to roll with the punches.

Next week, we will take a look at another type of tax that can be avoided with some proactive planning – Income Taxes.  More specifically, we will be looking at some last minute tax planning strategies. In the meantime, enjoy the holiday season but don’t  give up on budgeting if you happen to spend a little more than expected or do something that forces you to pay the “stupid tax.”

 

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