Our Emergency: Why We Cash Flow Medical Bills

If only I’d known how timely my post schedule was…

Just Tuesday I posted Emergency! Why You Need an Emergency Fund Now! I talked about how this particular item is our financial focus right now and where we are in the baby steps. Little did I know that Wednesday we would experience an emergency. Murphy must’ve heard me talking about him.

Our Emergency

In case you don’t follow @alifeonadime on Instagram, here is a little recap I posted after the dust settled:

My newfound love affair with glass is over. This dispenser shattered on the tile and sent us running to the ER this afternoon. 
Not long after I tried to deter my 2 year old from the lower shelves by storing things in bins he snuck in and pulled the dispenser off the shelf. 
We thought it was safe from his reach. We were wrong. Thankfully he appears to have avoided any permanent damage but we should know for sure in a few days. Praying that little thumb keeps moving. 
Today was by far my scariest moment as a parent yet. And I saw this kid angel flighted to Little Rock at 2 days old. This was unexpected and the sounds of glass and screaming are not going away from my memory any time soon. 
I am only posting this because he is currently sleeping on me. I am soooo thankful we have savings however small and insurance in which his deductible has been met. This is why we need emergency funds. Money was not on our list of concerns sitting in the ER through x-rays and shots and sutures. He was. I am so thankful we are not the typical household that could not cover a $1000 expense. I sincerely hope you aren’t either.

When I sat down two weeks ago and mapped out my blog posts for the month I had no idea that I would be the one needing them most. I guess this week I’m just posting my personal diary.

Medical Bills Happen

If you are breathing and especially if you have children you can expect medical bills. My husband has glaucoma. His eye exams are more in-depth than what vision insurance typically pays. He also goes every six months as opposed to once a year (ca-ching). If the pressure has changed, and it usually has, he gets a new prescription eye drop (ca-ching) and has a follow-up in two weeks (ca-ching) to see if it is relieving the pressure. If it isn’t, you guessed it, he gets new drops (ca-ching_ and another recheck (ca-ching).

Insurance Makes Things Interesting

To make things more interesting insurance takes a while to process the claims so it can be a few months before we see the bill. It is not uncommon to get two or three bills at once and sometimes they are already 60 plus days past his appointment date before we ever see the amount owed. Depending on the size of the amount due I typically just pay the oldest first and then pay the rest off in two or three chunks. It’s not perfect but it works. It seems expensive but he never seems to meet his deductible. Gotta love insurance.

To make our insurance situation even trickier our kids were double insured until last year when I left my full-time job. Prior to that, we hadn’t paid a dime for our son’s physical therapy that hadn’t been refunded. After my insurance expired we were surprised by a $600 bill from the therapy clinic. I called and it turned out that even though my insurance was secondary it was picking up the tab on everything while the primary insurance policy was just applying everything to the deductible.

January 1st rolled around and we had to start over on our deductible and there was no secondary insurance paying the balance. So we are making payments on that as well.

Why We Do Things This Way

You may ask why we don’t just pay the medical bills and be done. That is a valid question. Technically if you follow the baby steps you pay off all your debt before finishing your emergency fund.

We are also a single-income family at the moment. Heaven forbid my husband were to lose his job our little medical bills would not be our biggest concern. Our focus would be on buying food to feed our kids, keeping the lights on, and paying the mortgage so we could stay in our house. Paid off medical bills and little to no money in savings would not help us in that situation.

On the flip side, if we had an emergency fund not only could we feed our kids, keep the lights on, and stay in the house for a few months until we found a new source of income, we could also continue to make smaller payments on the medical bills. When it comes to personal finance you have to do what makes sense for your family. This makes sense for our family and helps us feel more secure.

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Sinking Funds

avoid that sinking feeling

Avoid the Sinking Feeling that Comes with not Planning Ahead

Set Money Aside for Larger Expenses in Advance

Sinking funds are an excellent way to cover infrequent, larger expenses and avoid that sinking feeling you get when you reach for the credit card to cover an expense you knew was coming but just didn’t plan for. They aren’t as complicated as they may sound either! We used them to cash flow home renovation projects and major purchases long before we knew what they were called.

In essence, a sinking fund is a separate bank account or cash envelope you contribute to for a specific, typically larger expense. Say you plan to “sink” money into vehicle maintenance, a new(er) car fund, or save for a down payment on a house. You may pay your insurance premiums quarterly or annually for a discount. You expect these expenses and set aside money on a regular basis. These are all sinking funds. You may have one or more going and simply refer to it by its purpose; the car fund, new house fund, maintenance fund…

More recently we employed the sinking fund method to cash flow our property tax bill. We set aside a specific amount each month for three months and then paid the bill in full. This avoided an uncomfortable budget deficit one month or the need to raid our primary savings.

Or, you may find it beneficial to set up sinking funds for other recurring expenses that add up but don’t necessarily happen every month. Examples include a birthday fund, Christmas gift fund, clothing, etc. Avoid that sinking feeling and the urge to go into debt when the kids hit that inevitable growth spurt or tear through the knees of all their good pants.

You know it’s going to happen, so why not plan for it?

If you have any questions or just want to join the conversation drop them in the comments to this post or send me an email. I would love to talk more.

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Birthday Party Budget Breakdown

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How’d we do?

I previously posted how we planned to host the kids’ birthday party on a $150 budget including food and kids’ gifts. You can click here to read that if you missed it. Here is the budget breakdown:

budget breakdown

We spent $69 for martial arts lessons for our daughter and she is loving the classes! Our little white belt just earned her first stripe this week for learning her first basic form!

We also spent a total of $54.93 on the previously mentioned sit on tractor and T-ball set from Amazon.

I also spent $12.92 at Target on a felt tool set for my son and favor bags (which I forgot to fill, so they’re ready for next year!). That made a total of $136.85 of the $150 budget.

But what about the food?

budget breakdown
Pickup portion of food

Where is the food in the budget breakdown you ask? We didn’t have to use the budget for the party food! My husband helped a coworker after work one day and was given $40 in return. I used that unexpected money and paid for burger patties, turkey dogs, buns, cake mix, frosting, a fruit bowl, condiments, lettuce, and tomatoes with cash!

So for the budget breakdown purposes, we were able to use $13.15 elsewhere in our monthly budget. Like the newbie I am at this blogging thing I forgot to take pictures of the spread before everyone dug in!

Not too shabby! Would you call that under or over? Technically I think it could go either way since we did spend money, but it wasn’t all from the budget. Let me know what you think!

Have you hosted any parties lately? How did you do on your budget? Let me know in the comments! I’d love to hear how you entertain your loved ones on a dime!

budget breakdown
Play Ball!
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Six Months til Christmas

Will you be ready?

We are exactly six months away from Christmas; is your Christmas budget ready? Know how you’re going to pay for all those holiday expenses? If so, great! Haven’t got a clue? You still have time to get it together!

Our family has a sinking fund for Christmas. Every pay period $15 automatically gets deducted from my husband’s check and deposited into our Christmas savings account. It is on auto-pilot.

In the fall interest will be paid and a check is given to us to do our shopping. If I happen to find the perfect gift for someone on our list before that I can withdraw up to a certain amount without having to pull from another budget category. This allows some flexibility while still earning a little interest.

If that isn’t for you…

Not interested in setting up an extra account? Simply create a cash sinking fund and pull out a designated amount every paycheck or every month.

With a little bit of planning now you can still manage a little something special for everyone on your list without resorting to credit cards.

Set aside cash so you can be sure you have the funds in place to get your holiday cheer on when the time comes without reaching for the plastic.

Get a Side Hustle

Don’t have room in the monthly budget for gift giving? Get yourself a side hustle to set some aside for gifting and get a bit ahead of your expenses. Your bank account will thank you long after Christmas if you get your financial life in order now.

Downsize Your Gift List or Opt Out of Gifts Altogether

There is nothing wrong with this option either. The true spirit of Christmas is about a baby in a cradle who died on a cross for our sins. The gift giving commercial aspect isn’t a requirement for goodwill to man. Now is the time to let those you typically exchange gifts with that you are doing things differently this year. They may be relieved to save some money too.

If your extended family that gets together is simply too big to afford gifts for everyone participate in a name exchange and only worry about buying for one person. Let the kids exchange names too so they don’t go home empty handed or end up with an even more crowded toy box.

Have a potluck Christmas dinner and go caroling, check out the town lights, or attend a special service together instead of your annual gift exchange.

Is your Christmas budget ready? Let me know in the comments or head over to Instagram and join in on the conversation there! I’d love to hear your plans and how you plan to celebrate Christmas with your loved ones on a dime.

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Birthday Budget with a Life on a Dime

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June is the birth month for both of my children, which could really add up… if we let ourselves get caught up in the hoopla. Last year being our son’s first birthday we did give each a separate family party at home. This year with all the summer traveling going on we decided to do one backyard barbecue to celebrate both kids. One birthday budget for both kids.

We had pancakes for breakfast and a simple meal of pizza at home on the day of my son’s birthday because those are his favorite foods. Just being two, and needing clothes for warmer weather before his actual birthday I took him shopping just the two of us and purchased four little outfits for around $20 ahead of time. We sang him Happy Birthday at every meal and had an otherwise typical day at home. And you know what? He felt loved and knew we were happy he is around. No clowns or bounce houses required. There is nothing wrong with those things, by the way, if you can afford them and have budgeted for them, but it just isn’t how we choose to spend our money in the birthday budget category this year.

birthday budget

On my daughter’s birthday we will cook her favorite foods for breakfast and dinner and strive to make her feel special as well. There will probably be one gift to open. She will be six. We are teaching her to appreciate people and experiences more than stuff. As a wannabe minimalist who just purposely built a smaller house for the purpose of not accumulating stuff we decided to incorporate this into her gift and she will be starting martial arts classes. We just visited the studio this afternoon and picked up her uniform. It is a happy coincidence the next session starts on her actual birthday.

I have a total budget of $150 for the kids’ birthday party this month, martial arts lessons included. This will cover one gift to open from us each and food. For our son I ordered this cute pedal-powered tractor. Our daughter is getting a T-ball set. We are keeping it simple.We already have condiments. The invitations pictured above were picked out by the kids at Dollar Tree. As the kids get older we will obviously invite more friends and have to plan more activity, but for now this pace suits us just fine.

How do you budget for birthdays? Do you have a sinking fund? Allocate funds the month leading up to the special event? Please comment and let me know. You can also head on over to the corresponding post on my instagram page, @alifeonadime and join in on the conversation there.

Happy budgeting!

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