Last time, we began this short series on Money Pirates. Money Pirates are unexpected, sudden events which cost a lot of money! They can throw your whole financial ship off course, and leave you begging for the plank.
So far, we’ve covered:
- Job Losses
- Loss of Home
- and Medical Emergencies
Those are 3 terrible pirates that will wreak havoc on your finances! Now we’re going to cover the last 4 on my list. So, pull up your anchors, hoist the main sail, grab the compass, and let’s go!
Mechanical failures are probably one of the least important things on this list, but they can still make a huge difference. One of the reasons that I say they are “least important” is because most of the mechanical things in our lives are really just for convenience.
They are time savers. We can wash clothes by hand, we can wash dishes by hand, many of us could even take buses to work, or walk, but is isn’t as convenient.
Please don’t take that as a blanket statement. I’m sure there are people out there that need an air conditioner because they have a rare illness, but most people can defer many of these costs.
How can you prevent this Money Pirate?
- Preventative maintenance! Take the lint out of the lint-catch, change the A/C filters, change your car’s oil, and quit being lazy. You’ll get a lot more life out of things if you just take care of them properly.
- Don’t buy extended warranties. Maybe one had worked out for you in the past, but you were an outlier. There is a bell curve setup for the product, and they make sure that only the greatest of anomalies are covered by the extended warranty.
Debt Coming Due
This one mainly applies to student loans. People take on a ton of debt while in school, they get used to deferring it, then they are surprised by the massive monthly payment they have now that they are out of school and can’t find a job. The worst part of student debt is that it is a Money Pirate that even bankruptcy can’t wipe out.
How do you prevent it?
- Don’t get into student loan debt.
- Keep on top of the debt if you already have it, and know how much the monthly payment will cost.
- Make payments where you can while it is in deferment.
Probably near the pinnacle of feeling helpless is when a massive natural disaster is coming at you, and no one can help you. Yes, there are people who live in disaster prone areas, but that aside, natural disasters are hugely unforseen.
Look at Hurricane Katrina, and the Earthquakes in Haiti and Japan. Japan was further complicated by the nuclear reactors. Talk about unforeseen!
I’d like to give tips on how to avoid these, but there really isn’t much you can do. Move away from disaster prone areas (That’s not as easy when that is where you were born, or where all of your friends and family are), ensure that you have everything properly insured, and evacuate when you’re told to.
Sorry, I don’t care how much you like that Grandfather clock, you won’t be able to protect it from a category 5 hurricane!
This should largely be viewed as a blessing. You’re married, you’re starting your life out, and now you’re officially becoming a family. Even though a child is a blessing, I won’t pretend that it doesn’t come with a ton of new costs and responsibilities.
Between doctors visits, hospital bills, clothing, diapers, formula, toys, bottles, and furniture, it’s enough to send anyone running to the nearest poor house.
How do you prevent or prepare?
- Without getting too personal, and staying family friendly, employ protection. Can you really say it was unexpected if you don’t?
- Make sure that you plan your finances with enough margin to handle the new addition before you’re even trying.
- Yes, if you must, literally create a mock budget with baby supplies factored in.
- Ensure that you have the proper insurances in place.
- Verify employer options. Some employers help out with the costs, or even offer daycare for employees.